Annual report
2023
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Fax: +45 38 17 00 11
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CVR 21 40 83 95
Annual report
1 January – 31 December 2023
Approved at the annual general meeting
On 10 April 2024
Chair of the annual general meeting
OVERVIEW 2
Content
1)
Key figures & ratios ....................................................... 3
2024 outlook ................................................................... 4
Group results .................................................................. 5
Commercial development............................................ 8
Cash generation and free cash flow....................... 10
Capital structure .......................................................... 11
Northern Europe ......................................................... 12
Central & Southern Europe ...................................... 13
Asia & Pacific ................................................................ 14
Americas ........................................................................ 15
OneISS strategy ........................................................... 16
The Company of Belonging ...................................... 18
Diversity ......................................................................... 22
Our journey to net zero ............................................. 23
Our business risks ...................................................... 25
Corporate governance .............................................. 28
Our governance structure ........................................ 31
Parent company .......................................................... 32
Consolidated financial statements ......................... 33
Parent company financial statements ................. 116
Management statement.......................................... 132
Independent auditor’s report ................................ 133
Forward looking statement .................................... 137
1)
Management review comprises pp. 2– 32.
ISS Global A/S
– an integral part of the ISS A/S Group
ISS Global A/S is an indirectly, wholly owned sub-
sidiary of ISS A/S, a leading, global provider of
workplace and facility service solutions, listed on
Nasdaq Copenhagen. ISS Global A/S owns –
directly or indirectly – the ISS Group’s operating
companies (together referred to as “ISS”, “the
Group” or “the ISS Global Group”). ISS Global A/S
operates as the ISS Group’s internal bank and
therefore holds the majority of the ISS Group’s
external funding.
As part of its financing function ISS Global has
entered into the Euro Medium Term Programme
(EMTN Programme) whereunder the ISS Global
A/S Group may from time to time issue notes to
raise funding. Notes under the programme have
been admitted to trading on the Luxembourg
Stock Exchange’s regulated market. The aggre-
gated nominal amount of Notes outstanding will
not at any time exceed €3.000.000.000. No up-
dates to the EMTN programme have occurred in
2023.
EUR 300 million of EMTN bonds will mature
in December 2024 and EUR 500 million will ma-
ture in July 2025. In the first half of 2024, the
Group will evaluate different financing options. Ex-
cept for this, ISS has no material short-term debt
maturities.
ISS Global A/S is an integral part of the ISS A/S
Group. Thus, operating, financing and investing
activities are managed for the ISS A/S Group as a
whole, rather than specifically for the ISS Global
Group.
The management team of the ISS Global Group
formally consists of the Board of Directors and the
Executive Management of ISS Global A/S. Since
ISS Global A/S has no operating activities inde-
pendently of the ISS A/S Group, the ISS Global
Group relies on the management team of ISS A/S,
which is considered the ISS Global Group’s key
management personnel.
Due to this structure, the sections OneISS strat-
egy, The Company of Belonging, Diversity, Our
journey to net zero, Our business risks, Corporate
governance and Our governance structure of the
Management review, pp. 16–31, are described in
the context of the ISS A/S Group.
2023 Sustainability Report
The 2023 Sustainability Report of the ISS A/S
Group as per section 99a of the Danish Financial
Statements Act is available here:
Sustainability-Report-2023.pdf (issworld.com)
2023 Remuneration Report
The remuneration policy is described in the 2023
Remuneration Report which is available here:
Remuneration-Report-2023.pdf (issworld.com)
OVERVIEW 3
Key figures & ratios
Financials
2023 2022 2021 2020 2019
Results (DKKm)
Revenue 78,702 73,858 71,383 70,767 77,715
Operating profit before other items 4,150 3,811 2,920 (2,501) 3,829
Operating profit before other items, excl. IAS 29 4,198 3,840 2,920 (2,501) 3,829
Operating profit 2,881 2,602 1,628 (4,899) 2,059
Financial expenses, net (410) (313) (573) (549) (695)
Net profit from continuing operations 2,016 1,991 496 (5,262) 798
Net profit from discontinued operations
1)
(1,725) (36) 110 46 (46)
Net profit 291 1,955 606 (5,216) 752
Cash flow (DKKm)
Cash flow from operating activities 3,284 3,020 3,221 (886) 1,275
Acquisition of intangible assets and property, plant
and equipment, net
(553) (588) (424) (552) (897)
Free cash flow 1,819 1,616 1,900 (2,143) (264)
Free cash flow, excl. IAS 29 1,835 1,608 1,900 (2,143) (264)
Financial position (DKKm)
Total assets 44,766 43,564 40,357 40,134 42,945
Goodwill 15,121 15,853 15,063 15,093 16,513
Additions to property, plant and equipment
and right-of-use assets
1,298 1,104 1,164 1,120 1,371
Equity 7,126 7,026 4,246 3,195 2,711
Net debt 6,602 8,072 9,816 12,345 17,274
Ratios
Financial ratios
Operating margin 5.3 % 5.2 % 4.1 % (3.5)% 4.9 %
Operating margin, excl. IAS 29 5.3 % 5.2 % 4.1 % (3.5)% 4.9 %
Equity ratio 15.9 % 16.1 % 10.5 % 8.0 % 6.3 %
Organic growth 9.7 % 8.4 % 2.0 % (6.6)% 7.1 %
Acquisitions and divestments, net 0.5 % (5.8)% (0.5)% (0.2)% (2.2)%
Currency adjustments (3.6)% 0.9 % (0.6)% (2.1)% 0.7 %
Total revenue growth 6.6 % 3.5 % 0.9 % (8.9)% 5.6 %
ESG
Social data
Full-time employees, % 77% 77% 76% 75% 77%
Employees (end of period), number 352,508 350,793 354,394 378,724 470,806
Employees (average), number 348,751 352,540 362,554 434,664 483,296
1)
In 2023,
France was presented as discontinued operations. Comparatives for 2022 are restated.
For definitions, see 8.5, Definitions.
OVERVIEW 4
2024 outlook
ISS Global A/S is an indirectly, wholly owned
subsidiary of ISS A/S and an integrated part of the
ISS A/S Group.
In 2023, ISS took further steps in unfolding the full
potential of the OneISS strategy, and the financial
performance improved. With recent years’ opera-
tional and financial progress as well as the prioriti-
sation of the OneISS strategic initiatives, a solid
foundation for continued progress in 2024 is pro-
vided.
The 2024 outlook for organic growth, operating
margin and free cash flow assumes that macroeco-
nomic and geopolitical uncertainties remain high.
ISS has robust operating processes and is well posi-
tioned to operate in this environment. The execu-
tion of the OneISS strategy will continue and en-
hance the operating model, strengthen competi-
tiveness, and increase focus on growth initiatives.
The outlook is excluding any effects of hyperinfla-
tion (IAS 29).
Organic growth
4 – 6%
(2023: 9.7%)
Organic growth is expected to be 4-6% for 2024.
Growth will be driven by price increases imple-
mented across the Group as the tight management
of cost inflation will be maintained. In addition, posi-
tive volume growth from increasing activity levels at
customer sites and contract expansions is ex-
pected, as well as a positive contribution from net
contract wins. The impact from projects and above-
base work is expected to be neutral to slightly neg-
ative.
Operating margin
1)
> 6%
(2023: 5.3%)
Operating margin is expected to be above 6%.
Compared to the 2023 underlying margin of 5.5%,
the main drivers of the increase are continuing op-
erational improvements and efficiencies across the
Group as well as operational benefits and cost sav-
ings generated from the review of the OneISS initia-
tives.
1)
Based on operating profit before other items
Free cash flow
> DKK 1.7 billion
(2023: DKK 1.8bn)
In 2024 free cash flow is expected to be above DKK
1.7 billion, adversely impacted by timing effects in-
cluding certain payments being withheld by
Deutsche Telekom as described on p. 6 of this re-
port.
Other revenue impacts
Acquisitions and divestments, net
~ 0.5%-point (positive)
Based on acquisitions and divestments completed
by 15 February 2024 (including in 2023).
Foreign exchange rates
~ 2%-points (negative)
2)
Based on current exchange rates, excluding any ef-
fects of hyperinflation (IAS 29).
2)
The forecasted average FX rates for 2024 are calculated using the realised
average FX rates for the first month of 2024 and the average forward FX
rates (as of 19 February 2024) for the remaining eleven months of 2024
Delivery on 2023 outlook
Organic
growth
Operating
margin
Free
cash flow
Annual report 2022 4 - 6% 5.0 - 5.5% ~DKK 1.7bn
H1 2023 7 - 9% Unchanged Unchanged
Actual 2023 9.7% 5.3% DKK 1.8bn
The outlook should be read in conjunction with
Forward-looking statements, p. 137 and Our busi-
ness risks, pp. 25–27.
For Definitions, see 8.5, Definitions on p. 114.
OUR PERFORMANCE 5
Group results
2023 was a year of significant macroeconomic
and geopolitical uncertainty, but ISS’s operating
model showed resilience and financial results
improved. Successful implementation of price
increases combined with underlying volume
growth from increased activity levels at cus-
tomer sites secured high organic growth.
Profitability improvements were broad-based
driven by OneISS efficiencies and cost initiatives
as well as improvements in the UK and on the
Deutsche Telekom contract.
Revenue
Group revenue in 2023 was DKK 78.7 billion, an in-
crease of 6.6% compared with 2022. Organic growth
was 9.7% and the impact from acquisitions and di-
vestments, net was 0.5%. Currency and other effects
were a negative 3.6%, including the impact of hyper-
inflation in Türkiye of (0.2)%.
Organic growth remained high throughout 2023, but
growth rates reduced as expected during the year
from 12% in Q1 to 7% in Q4, as the comparative fig-
ures for 2022 reflected the return-to-office trend
which picked up in the second half of 2022. Portfolio
revenue grew by 12% organically.
Price increases contributed around 6.5% to organic
growth, of which around half was related to price in-
creases implemented in Türkiye.
Across the Group, cost inflation was high, predomi-
nantly driven by wage adjustments to minimum and
collective agreements. This effect was to a large ex-
tent mitigated through implementation of price in-
creases to customers in accordance with contractual
terms. In addition, underlying volume growth from
higher activity levels at customer sites and office
occupancy rates contributed just above 3% to the or-
ganic growth for the Group. Food services, in particu-
lar, was positively affected by this development and
revenue increased by around 18%, mainly driven by
more than 20% organic growth in the US from pre-
dominantly office-based food services. In 2023, food
services accounted for 15% of Group revenue (2022:
14%).
Revenue from projects and above-base work ac-
counted for 16% (2022: 18%) of Group revenue, a
slight organic decline and thereby contributed mar-
ginally negative to organic growth for the Group. De-
mand for traditional projects and above-base work
remained solid, but this was offset by reduced de-
mand for Covid-19-related services mainly in the
Asia-Pacific region as the last restrictions were lifted
in January 2023.
The organic growth contribution from net contract
wins was slightly positive as contracts won during
2022 and 2023 and the full-year effect of the contract
win with a global retailer in the US that mobilised in
H2 2022 more than offset the effects from the exit of
the Danish Defence contract in May 2022 and con-
tracts lost during 2023.
Revenue from key account customers accounted for
72% of Group revenue in 2023 (2022: 73%) and grew
organically by 7.9%. Growth was driven by increased
activity levels, investments in workplaces and price in-
creases.
All regions contributed to the positive organic growth
in 2023. The highest growth rates were reported in
the Central & Southern Europe region mainly driven
by Türkiye, where price increases mitigated high cost
inflation and underlying volume growth and contract
wins provided positive contributions.
Revenue
1)
(DKKm)
2023 2022
Organic growth
Acq./
div.
Currency &
other adj.
Revenue
Growth
Northern Europe 29,324 28,694 6% (0)% (4)% 2%
Central & Southern Europe 24,805 21,800 16% 2% (4)% 14%
Central & Southern Europe, excl. IAS 29 24,807 21,646 16% 2% (3)% 15%
Asia & Pacific 14,229 14,012 7% (0)% (5)% 2%
Americas 9,605 8,585 13% - (1)% 12%
Other countries 783 795 0% - (2)% (2)%
Corporate / eliminations (44) (28) - - - -
Group 78,702 73,858 9.7% 0.5%
(3.6)%
6.6%
1)
Excluding ISS France (presented as discontinued operations)
OUR PERFORMANCE 6
Operating profit before other items
Operating profit before other items amounted to
DKK 4,150 million corresponding to an operating
margin of 5.3% (2022: 5.2%). Excluding the effect
from hyperinflation in Türkiye, operating profit before
other items was DKK 4,198 million leading to an op-
erating margin of 5.3% (2022: 5.2%).
In the second half of the year, a review and prioritisa-
tion of OneISS initiatives, which were launched in
2020, was conducted. As a result of the review, one-
off costs of DKK 155 million were recognised, impact-
ing operating margin negatively by around 0.2%-
point. The majority of recognised one-off costs have
cash flow impact in 2024. One-off costs related
mainly to severance payments and general cost ad-
justments to enhance strategic and operational exe-
cution. Adjusted for one-off costs, operating margin
was approximately 5.5%.
In 2023, the cost base was impacted by rising infla-
tion rates, mainly because of increasing minimum
wages and collective wage agreements.
ISS has strong and well-embedded processes in
place, and price increases were implemented in line
with contractual agreements. Combined with opera-
tional efficiencies, the effect from inflation was miti-
gated, and the operating margin was generally unaf-
fected.
The improvement to operating margin in 2023 was
driven by benefits from OneISS efficiencies and cost
initiatives across the Group. Furthermore, operating
leverage from the higher revenue impacted the mar-
gin positively. In addition continued improvements
on the Deutsche Telekom contract and in the UK con-
tributed to the improved operating margin. However,
both the UK and Deutsche Telekom contracts re-
mained dilutive to the Group operating margin, and
management continues to plan and implement fur-
ther initiatives to strengthen operational and finan-
cial performance.
Profitability on the Deutsche Telekom contract im-
proved further from the breakeven level at the end of
2022 driven by a continued strict focus on achieving
operational efficiencies in all areas of the contract.
The arbitration process initiated by ISS regarding cer-
tain contractual disagreements is still ongoing as fur-
ther described above.
From a regional perspective, margin improvements
were broad-based and were achieved through the re-
alisation of OneISS efficiencies and operating lever-
age from the higher revenue.
Operating profit before other items
1)
(DKKm)
2023
2022
Northern Europe 1,572
5.4% 1,519
5.3%
Central & Southern Europe 1,439
5.8% 1,117 5.1%
Central & Southern Europe, excl. IAS 29
1,487 6.0% 1,146
5.3%
Asia & Pacific 875 6.1%
882 6.3%
Americas 489 5.1% 445 5.2%
Other countries 48 6.1%
60 7.6%
Corporate / eliminations (273) - (212) -
Total 4,150 5.3% 3,811 5.2%
Total, excl. hyperinflation (IAS 29) 4,198 5.3% 3,840 5.2%
1)
Excluding ISS France (presented as discontinued operations)
OUR PERFORMANCE 7
Central & Southern Europe contributed the most to
the improvement, mainly driven by generally solid de-
velopments and continued progress on the Deutsche
Telekom contract. Northern Europe benefitted from
margin improvements and generally solid develop-
ments across the region and in the UK. In the Ameri-
cas, the underlying margin increased driven by
OneISS efficiencies and operational improvements
achieved across the region, mitigating negative ef-
fects from the tight labour market in the US. In Asia
& Pacific, a slight decline was seen, mainly driven by
reduced demand for margin-enhancing Covid-19-re-
lated services and additional costs related to labour
shortages in selected markets.
Other income and expenses, net
Other income and expenses, net was an expense of
DKK 90 million (2022: income of DKK 76 million),
mainly due to a fair value adjustment of the contin-
gent consideration related to the disposal of the 40%
minority stake in ISS Türkiye in 2021 and a loss on
the divestment of the security and technical services
businesses in Spain. This was partly offset by a gain
from the divestment of the Landscaping and Sanita-
tion Services businesses in Singapore.
Operating profit
Operating profit was DKK 2,881 million (2022: DKK
2,602 million).
Financial income and expenses, net
In 2023, financial expenses, net amounted to DKK
410 million (2022: DKK 313 million) including a non-
monetary gain of DKK 87 million relating to hyperin-
flation restatement (IAS 29) in Türkiye (2022: DKK 138
million). Excluding the impact from IAS 29, financial
expenses, net were DKK 497 million (2022: DKK 451
million). The increase was primarily due to interest
expenses being adversely impacted by an increase in
interest rates. Further, foreign exchange losses of
DKK 100 million (2022: DKK 73 million), primarily on
intercompany loans denominated in TRY and EUR,
had a negative effect.
Income tax
Income tax was DKK 455 million (2022: DKK 298
million) for an effective tax rate of 18.4% (2022:
13.0%). The effective tax rate was positively impacted
by the release of valuation allowances on deferred
tax assets in Germany, whereas the impact from hy-
perinflation adjustments in Türkiye and non-tax-de-
ductible expenses impacted negatively.
Net profit from discontinued operations
Net profit from discontinued operations related
mainly to France and was a loss of DKK 1,725 million
(2022: loss of DKK 36 million). The loss in 2023 in-
cluded the impairment loss of DKK 1,257 million rec-
ognised at 30 June 2023 and subsequent impairment
losses and fair value adjustments of DKK 201 million.
In addition, the operational performance of the busi-
ness was slightly loss-making and one-off costs re-
lated to the divestment process have been incurred.
Net profit
Net profit was DKK 291 million (2022: DKK 1,955 mil-
lion).
OUR PERFORMANCE 8
Commercial development
The commercial development remained solid in
2023, and we benefitted from increased activity lev-
els and engagement. Customers continued to real-
locate their resources applying more to employees.
This reflects the need to create workplaces of the fu-
ture, with high-quality, productive work environ-
ments that will support innovation, collaboration,
and cultural belonging in a hybrid working model.
During the year, we successfully extended and ex-
panded several local and regional key account con-
tracts, as well as the global contract with Capgemini.
Despite the loss of a few customers, mainly within
the industry and manufacturing segment, the cus-
tomer retention rate in 2023 increased to 95%
(2022: 93%) and thus we reached our mid-term tar-
get. At the beginning of 2024, we extended the
global IFS partnerships with Nordea and an Industry
& Manufacturing customer as well as several key ac-
count contracts.
The pipeline of commercial opportunities for IFS so-
lutions remains solid within our strategic focus seg-
ments, driven by local and regional deals. The key
account contracts awarded in the year were mainly
with local customers, including the Department for
Environment, Food and Rural Affairs (Defra) in the
UK and the Danish Building and Property Agency in
Denmark.
The commercial decision processes, especially for
global tenders, continued to take longer and are
more complex than during pre-Covid times, as the
importance of the workplace has increased, and ad-
ditional stakeholders are involved in the processes.
In our commercial processes, we are maintaining
strong pricing discipline and are not taking on un-
capped inflation risk.
Contract maturity
The majority of our key account contracts have
initial terms of three to five years. A significant
share of revenue is consequently up for renewal
every year.
In 2023, revenue from large key accounts was
DKK 26.0 billion, or 33% of Group revenue. Going
into 2024, contract revenue of DKK 2.9 billion (4%
of Group revenue) is up for renewal (adjusted for
renewals up until 22 February 2024).
OUR PERFORMANCE 9
OUR PERFORMANCE 10
Cash generation and free cash flow
Cash flow from operating activities
Cash flow from operating activities was DKK 3,284
million (2022: DKK 3,020 million). Operating profit
before other items improved in 2023 and outflow
from changes in provisions was lower than last year.
The positive impact was, however, partly offset by
lower inflow from changes in working capital and
higher interest paid, net.
Changes in working capital was an inflow of DKK 219
million (2022: DKK 407 million). An increase in trade
receivables from high revenue growth, particularly
in Türkiye where payment cycles are longer than the
Group average, and adverse timing effects of certain
payments relating to contractual disputes was miti-
gated by strong collections and further offset by an
increase in trade payables. The increase in trade
payables was mainly a result of general optimisation
of supplier payment terms and a positive contribu-
tion from growth in food services where suppliers
typically have longer payment terms. Utilisation of
factoring increased slightly to DKK 1.4 billion (2022:
DKK 1.3 billion) as a result of increasing revenue
from key account customers, where invoices, in
accordance with Group policy, are eligible for
factoring.
Changes in provisions, pensions and similar obliga-
tions were an outflow of DKK 473 million (2022: DKK
665 million), primarily due to payments related to
restructuring projects initiated in prior years as well
as defined benefit obligations and other provisions.
Interest paid, net was an outflow of DKK 261 million
DKK (2022: DKK 315 million). The decrease was
mainly driven by increased interests received from
companies within the ISS Group partly offset by in-
terest paid on bonds and lease liabilities due to in-
creased interest levels as well as utilisation of factor-
ing.
Income tax paid was an outflow of DKK 394 million
(2022: DKK 338 million) equal to a cash tax rate of
15.9% (2022: 14.8%).
Cash flow from investing activities
Cash flow from investing activities was an outflow of
DKK 892 million (2022: outflow of DKK 356 million).
The increase was the result of a reduced inflow from
divestments as the divestment programme was
completed in 2022.
Acquisition of businesses was an outflow of DKK 373
million (2022: DKK 325 million), primarily related to
the acquisition of Grupo Fissa in Spain. The acquisi-
tion strengthened the service delivery for local key
accounts in the southern region of the country and
improved ISS Spain’s market position within
Healthcare and local prioritised segments.
Divestment of businesses was an inflow of DKK 25
million (2022: DKK 587 million) driven by a few minor
divestments during the year.
Investments in intangible assets and property, plant
and equipment, net, of DKK 553 million (2022: DKK
588 million) was equal to 0.7% (2022: 0.8%) of total
revenue (including discontinued operations).
Cash flow from financing activities
Cash flow from financing activities was an outflow of
DKK 1,328 million (2022: outflow of DKK 855 million).
Repayment of lease liabilities was DKK 778 million
(2022: DKK 850 million).
Free cash flow
Free cash flow amounted to DKK 1,819 million
(2022: DKK 1,616 million). The increase was mainly
driven by the positive operating profit performance
stemming from the general margin improvement.
The tight management of working capital was main-
tained and despite the high revenue growth,
changes in working capital were an inflow, although
still slightly less than in 2022. Furthermore, reduced
investments in intangible assets and property, plant
and equipment were largely offset by an increase in
additions of right-of-use assets compared to 2022.
OUR PERFORMANCE 11
Capital structure
The ISS Global Group is indirectly wholly owned by
ISS A/S and is therefore part of the ISS A/S Group.
Group Treasury manages financing activities and
capital structure centrally for the ISS A/S Group as a
whole. The ISS Global Group’s financing activities
and capital structure are not assessed indepen-
dently of the ISS A/S Group.
In 2023, the Group’s liquidity position remained
strong, driven by the solid free cash flow generation.
At 31 December 2023, the Group’s readily available
liquidity reserves increased to DKK 12.1 billion
(2022: DKK 11.3 billion), see note 4.5 to the consoli-
dated financial statements.
During the year, the Group entered into a new sen-
ior unsecured Revolving Credit Facility of EUR 900
million with a syndicate of 12 banks. The facility ma-
tures in June 2028, with a two year extension option,
and replaced the EUR 1 billion Revolving Credit Facil-
ity maturing in 2024.
EUR 300 million of EMTN bonds will mature in
December 2024 and EUR 500 million will mature in
July 2025. In the first half of 2024, the Group will
evaluate different financing options. Except for this,
ISS has no material short-term debt maturities.
At 31 December 2023, net debt amounted to DKK
6.6 billion (2022: DKK 8.1 billion), a decrease of DKK
1.5 billion mainly due to free cash flow generation.
Equity
At 31 December 2023, equity was DKK 7,126 million
(2022: DKK 7,026 million), equivalent to an equity ra-
tio of 15.9% (2022: 16.1%).
The positive contribution from net profit of DKK 291
million and hyperinflation restatement of equity in
Türkiye at 1 January 2023 of DKK 467 million was
more than offset by foreign exchange adjustments
of foreign entities of DKK 438 million and remeas-
urement losses on defined benefit obligations (net
of impact from asset ceiling) of DKK 163 million.
For a complete overview of the development in
other comprehensive income in 2023, see 4.1.7,
Other comprehensive income.
OUR PERFORMANCE 12
Northern Europe
The market
ISS holds a market-leading position across this re-
gion of generally mature and competitive markets
with a relatively high outsourcing rate. The largest
country in the region is the UK, contributing
around 34% of revenue. Key segments include Of-
fice-based customers in Financial Services, Profes-
sional Services and Public Administration; Produc-
tion-based customers in Industry & Manufactur-
ing; and Healthcare.
Financial update
Revenue increased to DKK 29,324 million in 2023
(2022: DKK 28,694 million). Organic growth was
5.5%, while currency effects impacted growth neg-
atively by 3.7%.
In 2023, the region was positively impacted by un-
derlying volume growth from customers’ in-
creased activity levels. In addition, cost inflation
was mitigated through price increases imple-
mented across the portfolio. Portfolio revenue, in
particular, benefitted from this development and
grew 6.5% organically. The Northern Europe re-
gion has a relatively larger exposure to food ser-
vices, and it benefitted from increased activity lev-
els and higher office occupancy rates. Revenue
from projects and above-base work was main-
tained at a high level with positive organic growth
of 1.6% for the year, and it accounted for 19%
(2022: 20%) of revenue for the region in 2023.
The majority of countries in the region generated
positive growth, with Sweden and the Benelux
reporting double-digit organic growth. Sweden
contributed strong organic growth due to net
contract wins, price increases and increasing
activity levels in most customer segments. In
Benelux, developments were primarily driven by
increased activity levels with key account
customers, implementation of price increases and
contract wins in Belgium. Organic growth in
Denmark was negative due to the exit of the
contract with the Danish Defence in May 2022.
Commercially, our strategic focus on IFS and key
account customers secured both new contract
wins and extensions. All large key account con-
tracts with expiry dates in 2023 were successfully
extended. In addition, ISS was awarded new key
account IFS contracts with the Department for En-
vironment, Food & Rural
Affairs (Defra) in the UK
and the Danish Building and Property Agency in
Denmark, which will both start up during H1 2024.
The commercial pipeline remained solid across
the region.
Operating profit before other items was DKK
1,572 million (2022: DKK 1,519 million), corre-
sponding to an operating margin of 5.4% (2022:
5.3%). Adjusted for one-off costs related to the
OneISS review, operating margin was 5.5%.
The operating margin improved due to improve-
ments across the region, most significantly in Nor-
way, Sweden and Belgium, continued positive op-
erational developments in the UK, OneISS efficien-
cies, cost initiatives and operating leverage from
higher revenue. Despite the improvement, the UK
remained dilutive to the Group operating margin,
and management continues to plan and imple-
ment further initiatives to strengthen operational
and financial performance.
These improvements were partly offset by a lower
contribution from margin-accretive projects and
above-base work and reduced overhead costs ab-
sorption from lower revenue in Denmark, where a
higher cost level was strategically maintained to
support growth opportunities.
OUR PERFORMANCE 13
Central & Southern Europe
The market
Central and Southern Europe comprises a number
of key markets, where we hold leading market po-
sitions, including Switzerland, Spain, Austria and
Türkiye. With the decision to divest ISS France,
France is no longer part of the region, but is in-
stead presented as a discontinued operation.
Most of the markets are developed, but with sig-
nificant differences in IFS market maturity and
macroeconomic environment. Key customer seg-
ments include Office-based customers in Infor-
mation & Communication and Financial Services;
and Production-based customers in Industry &
Manufacturing and Pharmaceuticals; and
Healthcare.
Financial update
Revenue increased to DKK 24,805 million in 2023
(2022: DKK 21,800 million). Organic growth was
16.1%, of which 11.8% related to Türkiye, while ac-
quisitions and divestments, net increased revenue
by 2.3% related to Livit FM in Switzerland and
Grupo Fissa in Spain. Currency effects impacted
revenue negatively by 3.5%, while the net impact
from hyperinflation was negative at 0.4%. Exclud-
ing the impact of hyperinflation, revenue
amounted to DKK 24,807 million.
In 2023, organic growth in the region was primar-
ily driven by strong growth in Türkiye as a result of
high cost inflation mitigated through the imple-
mentation of price increases, underlying volume
growth as well as net contract wins in the
healthcare segment. Price increases were imple-
mented in all countries to offset the effects of cost
inflation, thereby positively impacting organic
growth. Furthermore, growth was driven by un-
derlying volume growth and net contract wins.
Portfolio revenue grew organically by 18.3%.
Throughout the year, Central & Southern Europe
maintained double-digit organic growth. The
trend was in line with expectations, however, de-
clining due to a tougher comparison base from
2022 when price increases were implemented,
and activity levels increased during the year.
In addition, the region benefitted from increased
demand for traditional projects and above-base
work from key account customers. Organic
growth for projects and above-base work was
6.1% and accounted for 18% (2022: 19%) of reve-
nue in the region and thus remained above pre-
Covid levels.
The commercial developments were solid and the
pipeline of new business opportunities remained
attractive. In addition, with the bolt-on acquisition
of Grupo Fissa, ISS Spain strengthened its market
position and improved its service delivery for local
key accounts in the southern part of the country.
As part of the transaction, ISS Spain welcomed
over 6,000 placemakers and took on cleaning con-
tracts within healthcare and local prioritised seg-
ments, representing around 1% of Group reve-
nue.
Operating profit before other items excluding the
impact of hyperinflation was DKK 1,487 million
(2022: DKK 1,146 million) corresponding to an op-
erating margin before other items of 6.0% (2022:
5.3%). Adjusted for one-off costs related to the
OneISS review, operating margin was 6.4%. The
positive development was a result of OneISS effi-
ciencies and cost initiatives, most significantly in
Spain and Switzerland, and operating leverage
from higher revenue. In addition, the continued
profitability improvement on the Deutsche Tele-
kom contract impacted positively, but still re-
mained dilutive to the Group operating margin,
and management continues to plan and imple-
ment further initiatives to strengthen operational
and financial performance. See p. 6 for an update
on the ongoing arbitration process. Including the
effect of hyperinflation (IAS 29), operating profit
before other items amounted to DKK 1,439 mil-
lion, corresponding to a margin of 5.8%.
OUR PERFORMANCE 14
Asia & Pacific
The market
The region comprises a mix of developed markets
including Australia & New Zealand, Hong Kong
and Singapore, as well as developing markets
such as Indonesia, India and China. ISS has a
strong presence in the region and holds a market-
leading position in several countries. Key cus-
tomer segments include Office-based customers
in Financial Services and Public Administration;
Production-based customers in Industry & Manu-
facturing; and Healthcare.
Financial update
Revenue increased to DKK 14,229 million in 2023
(2022: DKK 14,012 million). Organic growth was
7.1% (2022: 6.3%) and the effect from acquisitions
and divestments, net was negative at 0.4% due to
the divestment of non-core businesses in Singa-
pore, while currency effects impacted revenue
negatively by 5.1%.
Overall, organic growth was driven by underlying
volume growth due to increasing customer activity
and price increases implemented across the re-
gion. Portfolio revenue benefitted from this devel-
opment and grew organically by 12.7%. Organic
growth from projects and above-base was nega-
tive with 22.4%, due to reduced demand for Covid-
19-related deep cleaning and disinfection services
and accounted for 12% (2022: 16%) of the region’s
revenue for the year. The organic growth rate im-
proved during the first nine months of the year,
but it slowed slightly in Q4 due to a higher com-
parison base, ending at 5.6% for the quarter.
In 2023, India, Indonesia and Australia all reported
double-digit organic growth rates due to volume
growth from increased activity levels at customer
sites, implementation of price increases and start-
up of new contracts, including the contract with a
regional bank in Australia. As a result of the lifting
of Covid-19 restrictions in Hong Kong and China in
January 2023, demand for deep cleaning and dis-
infection services declined, and Hong Kong re-
ported slightly negative organic growth while
China remained positive.
During the year, the strategic focus on IFS and key
accounts secured both wins of local key account
contracts and retention and expansion of con-
tracts with existing customers. All large contracts
up for renewal, including with a Healthcare cus-
tomer in Hong Kong and a Public Administration
customer in Australia, have been retained and as a
result the customer retention rate improved. The
commercial pipeline remains solid across the re-
gion.
Operating profit before other items decreased to
DKK 875 million (2022: DKK 882 million), corre-
sponding to an operating margin of 6.1% (2022:
6.3%). Adjusted for one-off costs related to the
OneISS review, operating margin was 6.2%. The
decline was mainly driven by the reduced demand
for high margin Covid-19 deep cleaning and disin-
fection services in Hong Kong and China, addi-
tional costs related to labor shortages in Australia
and Hong Kong and a reduction in government
grants received. This was only partly offset by op-
erational improvements, most significantly in India
and operating leverage.
OUR PERFORMANCE 15
Americas
The market
The Americas consists of the mature North Ameri-
can market as well as Mexico and Chile. North
America is the world’s largest FM market, account-
ing for around 30% of the global outsourced FM
market. Food services account for a significantly
larger share of revenue compared to other re-
gions. Key customer segments include Office-
based customers in Technology and Financial Ser-
vices, as well as Production-based customers in In-
dustry & Manufacturing, Pharmaceuticals and
Food & Beverage.
Financial update
Revenue increased to DKK 9,605 million in 2023
(2022: DKK 8,585 million). Organic growth was
12.7%, the effect from acquisitions and divest-
ments, net was neutral, while currency effects im-
pacted growth negatively by 1.1%.
In 2023, organic growth was mainly driven by un-
derlying volume growth, price increases and net
contract wins. Higher customer activity levels and
in particular office occupancy rates benefitted rev-
enue from food services which increased by
around 16%. As a result, portfolio revenue grew
by 12.9% organically. Across the region, demand
for projects and above-base services, particularly
from key accounts, remained at a high level and
grew organically by 11.3%. Revenue from projects
and above-base services accounted for 12%
(2022: 12%) of the revenue in the region. Organic
growth for the region was particularly strong in
the beginning of the year but reduced as ex-
pected in the second half and landed at 3% in Q4.
This was a result of a higher comparison base, as
H2 2022 benefitted from accelerated return-to-of-
fice activity.
Developments were strong across the region with
all countries reporting double-digit organic
growth and the highest growth rates seen in the
US and Mexico. The US, in particular, benefitted
from the full-year revenue effect from the contract
with a global retailer, which mobilised during H2
2022, increased activity levels and higher office oc-
cupancy rates. Across the region, price increases
were implemented to offset the effects of cost in-
flation, and thereby had a positive contribution to
organic growth.
The strategic focus on IFS and key account cus-
tomers progressed and demand from key ac-
counts was more robust and resilient compared
to the rest of the customer base. Furthermore,
across the entire region, there was a solid com-
mercial development with smaller key account
wins along with retention and expansion of con-
tracts with current customers, including a global
Healthcare customer.
Operating profit before other items was DKK 489
million (2022: DKK 445 million), corresponding to
an operating margin of 5.1% (2022: 5.2%). Ad-
justed for one-off costs related to the OneISS re-
view, the operating margin was 5.3%. The increase
in the underlying margin was mainly driven by
OneISS efficiencies and operational improvements
achieved across the region mitigating negative ef-
fects related to the tight labour market in the US,
as well as operating leverage from increased reve-
nue. Last years’ margin was positively impacted by
non-recurring employee tax credits received un-
der the US Employee Retention Credit scheme.
The revenue increase in food services delivered
broadly the same margin as last year as most con-
tracts were renegotiated to cost plus commercial
models during Covid-19.
OUR BUSINESS 16
OneISS strategy
The OneISS strategic direction remains un-
changed. We aim to deliver strong business
growth at attractive and sustainable margins
by focusing on creating value for our custom-
ers, and ultimately our shareholders.
Our focus is on becoming the global leader in In-
tegrated Facility Services (IFS) and on driving our
bespoke value propositions towards key accounts
in three customer segments (Office-based, Pro-
duction-based and Healthcare) from our strong
position as the global leader in cleaning.
We continue to see strong demand for IFS. Key ac-
count customers are consolidating their supply
chains to focus on their core business, and they
need a strategic partner to drive user experience,
efficiency and consistency with solutions that are
sustainable and compliant across their work-
places.
OneISS defines our way of organising and aligning
behind a set of principles and business processes
that provide us with the ideal position to leverage
our strategic differentiators and address key mar-
ket demands.
Technology is a key enabler of OneISS. We con-
tinue to apply an increasing level of technology in
our solutions, while creating scalable platforms
and products to improve our service across work-
places.
We take pride in being a sustainable company.
Our value proposition covers not only our custom-
ers’ places, but also their impact on the environ-
ment and the engagement of placemakers.
Sharpened focus
For several year, ISS has worked towards estab-
lishing a solid foundation in the French market.
However, the efforts have not generated the ex-
pected financial improvements and consequently
in 2023, we decided to divest ISS France and repo-
sition ISS to only focus on servicing global key ac-
count customers.
On 22 December 2023, ISS signed a binding
agreement to divest ISS France to Onet SA, a
French facility services company, see p. 7 for fur-
ther details.
The EGM has reviewed and prioritised OneISS ini-
tiatives, which were launched in 2020. The review
focused on ensuring that all initiatives generate
the expected value and strengthen the strategic
execution. In 2024, we will continue to embed the
OneISS strategy, but we will prioritise and focus
on fewer initiatives.
Our operating model enables a portfolio of scala-
ble service products to drive a step-change in
productivity. Our products are designed to ad-
dress key customer needs in our prioritised seg-
ments, e.g. our innovative cleaning product “Pure
Space Office”, our food waste reduction service
product “Winnow” and our Energy Management
service to carry out onsite optimisation to reduce
electricity and gas consumption across a cus-
tomer facility.
We continue to invest in technology. High-quality
scalable platforms and digital solutions for both
our placemakers and customers are still key to im-
proving our services across workplaces, globally.
We have launched several key applications for cus-
tomers and placemakers to improve the service
we provide across workplaces globally, such as the
ISS Workplace app, ISS Takeaway app and ISS
Smart Tech Ecosystem.
During the last three years, we have invested sig-
nificantly in capabilities and competencies at
Group and regional level. At the same time, we
have established common organisational blue-
prints across countries. These structures have
now been implemented allowing us to reallocate
certain resources applied at Group and regional
level to other purposes, as our countries are capa-
ble of driving these processes without the previ-
ous support. This provides for more flexible, agile
and cost-effective day-to-day operations.
The review and prioritisation of OneISS initiatives
led to one-off costs of DKK 155 million, which were
recognised in 2023 with a negative impact on our
operating margin of around 0.2%. The majority of
recognised one-off costs have cash flow impact in
OUR BUSINESS 17
2024. The enhanced focus on initiatives is ex-
pected to generate operational benefits and esti-
mated cost savings of around DKK 85 million an-
nually, with approximately DKK 70 million ex-
pected to have effect in 2024.
Driving outcomes
We evaluate the success of our strategy and crea-
tion of shareholder value by using the financial
KPI’s described throughout “Our performance”
(pp. 5-15) and the sustainability KPIs described
throughout “The company of Belonging”, “Diver-
sity” and “Our journey to net zero” (pp. 18-24).
These KPIs enable us to systematically measure
our progress in achieving strong growth at
attractive and sustainable margins.
Our strategic priorities
Our five strategic priorities are essentially our stra-
tegic execution model focused on our customers,
organisation, technology as well as environmental
and social sustainability. An overview of how we
fared on these priorities in 2023 is provided be-
low.
OUR BUSINESS 18
OUR BUSINESS 19
OUR BUSINESS 20
OUR BUSINESS 21
OUR BUSINESS 22
Diversity inclusion & Belonging policy
The ISS A/S Group’s Diversity, Inclusion & Belonging policy
is available here:
ISS-Group-Diversity-Inclusion-Belonging-Policy-approved-
version.pdf (issworld.com)
OUR BUSINESS 23
Our journey to net zero
In Q4 2023, our near-term science-based
Emission targets were validated by the Sci-
ence-Based Targets initiative.
Commitments
Our net zero targets remain unchanged. We aim
to reach net zero for scope 1 and 2 by 2030 and
scope 3 by 2040. In 2023, we have continued exe-
cution on the key initiatives that support our net
zero commitments:
1. Electrify ~20,000 vehicles by 2030
2. Reduce emissions from food with 25% by
2030 and food waste with 50% by 2027
Our fleet electrification continues as planned and
by the end of 2023 we reached an electrification
ratio of 13.6% – up from 8.9% in 2022. Not sur-
prisingly, we see higher electrification ratios in the
countries that offer access to convenient and
widespread charging infrastructure.
Reducing food emissions is done through reduc-
ing consumption volume e.g. by optimising meal
sizes or by changing the recipe mix towards less
carbon emission intensive sources while at the
same time ensuring that end-users remain satis-
fied. Our talented chefs and food teams design in-
novative menus that support the well-being and
nutritious needs of our end-users and move us
closer to our 2030 food emission reduction target.
Progress is visible and in 2023 we have seen CO
2
emissions per 1,000 kcal reduce by approximately
5%.
Our food waste initiative is supported by our part-
nership with Winnow and we have continued our
roll-out of our Winnow food waste reduction ser-
vice product, which during 2023 helped us pass
the 30% reduction milestone against our 2019
baseline – well on track to meeting our 2027 re-
duction target of 50%.
Having our near-term emission targets validated
in 2023 by the Science-Based Targets initiative
was a major achievement and tangible proof that
we are moving in the right direction on our net
zero journey. There is still a long way to go and we
will during 2024 need to develop stronger and
more encompassing climate transition plans to
address more of our emission sources. We will do
so in parallel with continued execution on the de-
carbonisation initiatives already identified.
Our global partnership with Watershed entered
into in 2023 provides us with access to world class
technology that combined with our data compila-
tion will deliver insights on carbon performance
across group, countries, customers and supply
chain. The platform will become fully operational
in 2024 and will be an important enabler of our
continued net zero journey.
It will also enable us to provide better customer
insights into the carbon footprint of our services
including our Pure Space Office product that
aligns cleaning processes and leverages best
practice to ensure consistent delivery. During
2023, Pure Space Office was rolled-out to 10,214
sites across 25 countries and we target to imple-
ment it across all office sites in 2024, which on top
of positive carbon footprint effects also reduces
consumption of water and chemicals.
OUR BUSINESS 24
Read more in the 2023 Sustainability Report of ISS A/S here:
Sustainability-Report-2023.pdf (issworld.com)
OUR BUSINESS 25
Our business risks
We perceive risk management as an enabler
for value creation – for all our stakeholders –
while at the same time being important for
value protection.
Our business model is based on taking over facil-
ity services that are non-core to our customers. As
our services are integrated into our customers’
value streams, there is a risk of disrupting their
operations if operational risk management or con-
tract requirements are not complied with. Thus, as
a key business partner to the majority of our cus-
tomers, we play a significant role in their overall
risk management framework. Through our ser-
vices, we can proactively support our customers in
enhancing their risk management agenda and ca-
pabilities.
2023 risk agenda
Technology
As technology increasingly becomes an integral
part of the workplace, cyber security is equally im-
portant.
ISS has built industry-leading cyber security capa-
bilities in recent years. In 2023, we continued to
strengthen and develop internal technology capa-
bilities (e.g. AI and a new Tech Centre in Porto) to
capture opportunities related to productivity gains
and deployment of new services. We also contin-
ued the collaboration with well-established global
technology partners.
Environmental sustainability
Environmental sustainability is one of our five stra-
tegic priorities. Our ability to deliver on our net
zero and science-based targets is key to maintain-
ing our license to operate and our competitive ad-
vantage.
In 2023, we rolled out a group-wide carbon man-
agement and reporting tool to support carbon
disclosures at Group, Country, Account, and Site
level. The tool will simplify, standardise and auto-
mate the collection, validation, calculation and re-
porting of carbon metrics in countries and across
products and service lines.
Market developments
Office working
In 2023, we saw the steady emergence of a new
post-Covid office working trend, with an increas-
ing number of customers solidifying their return-
to-office strategies – entailing both risk and op-
portunities for ISS.
The pandemic has likely accelerated the working-
from-home trends and large office-based custom-
ers have in recent years downsized their office
space. At the same time, however, ISS is benefit-
ting from customers reallocating more resources
to employees and quality offerings, including by
increasing cleaning frequencies, ordering addi-
tional deep-cleaning and improving the quality of
food solutions. We believe that through our ser-
vice offering we can compensate for the effects of
these developments by capturing business oppor-
tunities to maintain and grow our business.
Inflation
Geopolitical events continued to exert pressure
on supply chains and consequently drove up infla-
tion. As such, inflation management remained a
priority in 2023. We continued to utilise the con-
tractual agreements in our customer contract
portfolio to implement price increases and
thereby mitigate the increasing operating costs of
our supply chain. In addition, the rise in inflation
continued to squeeze real wages and drove up
legislative minimum wages. To offset increased
operating costs from higher wages, we discussed
price increases or scope adjustments with cus-
tomers on a timely basis.
Continuously rising inflation poses a risk of evolv-
ing into a cost-of-living crisis during a mid-term
period, leading to further instability in labour mar-
kets. This puts sustainability in the spotlight, as
the potential effects of an unstable financial envi-
ronment may lead to social challenges.
OUR BUSINESS 26
Annual group risk review
As part of our annual process, we reviewed and
refined the Group’s key risks to reflect the main
exposure that may potentially impact the achieve-
ment of our OneISS strategic priorities. This led to
three new risks being classified as Group key risks:
“Strategic transformation”, “Emerging technology”
and “Data collection and analysis” and three risks
taken out of the group key risk map i.e. “Subcon-
tractors”, “IT ransformation” and “Finance and re-
porting”.
Each key risk has been assigned mitigation
measures and EGM ownership. See the following
page for details.
Sustainability Report of ISS A/S
In 2023, we provided a double materiality
assessment to identify sustainability risk and
opportunities most material to the ISS A/S Group
and our stakeholders.
For the outcome of the assessment, see the
2023 Sustainability Report of ISS A/S here:
Sustainability-Report-2023.pdf (issworld.com)
OUR BUSINESS 27
GOVERNANCE 28
GOVERNANCE 29
GOVERNANCE 30
GOVERNANCE 31
Our governance structure
PARENT COMPANY 32
Parent company
Financial review
Net profit decreased to (759) million (2022: DKK
(181) million) mainly due to reduced income from
subsidiaries and joint ventures as a result of in-
creased impairment.
Cash flow from operating activities was DKK 58
million, a slight increase compared to DKK 53 mil-
ion in 2022.
Cash flow from investing activities decreased to
DKK 906 million (2022: DKK 1,098 million) mainly
due to recuced positive impact from divestments
of subsidiaries as well as decreased dividends re-
ceived from subsidiaries.
Cash flow from financing activities was DKK (415)
million (2022: DKK 503 million). The decrease re-
lated mainly to decreased payments received from
companies within the ISS Group.
Equity was DKK 8,275 million (2022: DKK 9,034 mil-
lion) driven by net profit.
2024 outlook
Management expects net profit for 2024 to be in
line with the level realised in 2023.
Diversity reporting
This section covers ISS Global A/S's reporting in
accordance with the Danish Financial Statements
Act sections 99b and 107d.
The Board of Directors (the Board) is responsible
for annually determining the appropriate qualifica-
tions, experience and competencies required of
the Board and the Executive Management of ISS
Global A/S in order for the Board and the Execu-
tive Management to best perform their tasks, tak-
ing into account ISS Global A/S’s needs and the
existing composition of these boards.
The Board and the Executive Management recog-
nise the importance of promoting diversity and
consider both competencies and diversity in re-
spect of Board and Executive Management nomi-
nations according to which we are committed to
selecting the best candidate.
ISS Global A/S has no employees employed. The
management team of ISS Global A/S consists of
the Executive Management, comprising one mem-
ber employed by ISS World Service A/S (the parent
of ISS Global A/S) and the Board, whose members
are employed by ISS A/S and ISS World Services
A/S. As ISS Global A/S has no employees, the com-
pany has not implemented separate policies in ac-
cordance with section 107d.
Gender representation
Board
The current gender representation among Board
members (elected by the general meeting) is 25%
women and 75% men, which is considered equal
according to the Danish Business Authority’s ap-
plicable guidelines
1)
. As the gender representation
is considered equal, ISS Global A/S is exempted
from setting a target figure for the board.
Other management levels
Other management levels of ISS Global A/S com-
prise the Executive Management, which consist of
a single member employed by ISS World Service
A/S as described above. As ISS Global A/S has less
than 50 employees and the Executive Manage-
ment consists of less than three people, ISS Global
A/S has not adopted a company specific gender
target or policy promoting gender diversity at
other management levels.
CONSOLIDATED FINANCIAL STATEMENTS 33
Primary financial statements
34 Statement of profit or loss
35 Statement of comprehensive income
36 Statement of cash flows
37 Statement of financial position
38 Statement of changes in equity
39 Significant changes and events
40 Estimates and judgements
42 1 Operating profit
42 1.1 Segments
45 1.2
Revenue
48 1.3 Employee costs
49 1.4 Other income and expenses, net
50 2 Operating assets, liabilities and free cash flow
50 2.1 Trade receivables and credit risk
52 2.2 Other receivables
53 2.3 Other liabilities
53 2.4 Changes in working capital
54 2.5 Provisions, contingencies, guarantees and commitments
59 2.6 Right-of-use assets and property, plant and equipment
62 2.7 Free cash flow
63 3 Strategic investments and divestments
63 3.1 Intangible assets
66 3.2 Impairment tests
71 3.3
Acquisitions
73 3.4 Discontinued operations, assets held for sale and divestments
78 4 Capital structure
78 4.1 Equity
81 4.2 Borrowings and interests
84 4.3 Financial risk management
85 4.4
Interest rate risk
87 4.5 Liquidity risk
89 4.6 Currency risk
91 5 Tax
91 5.1 Income tax
93 5.2 Deferred tax
95 6 Remuneration
95 6.1 Management remuneration
96 6.2 Share-based payments
101 7 Other required disclosures
101 7.1 Pensions and similar obligations
105 7.2 Hyperinflation in Türkiye
108 7.3 Related parties
108 7.4 Fees to auditors
108 7.5 Subsequent events
109 8 Basis of preparation
109 8.1 Other material accounting policies
110 8.2 Change in accounting policies and disclosures
111 8.3 New regulations
112 8.4 Group companies
114 8.5 Definitions
CONSOLIDATED FINANCIAL STATEMENTS 34
Statement of profit or loss
1 January – 31 December
(DKKm) 2023 2022
Revenue 1.1, 1.2 78,702
Employee costs 1.3 (48,847 ) (45,405 )
Consumables (7,481 ) (6,485 )
Other operating expenses (16,921 ) (16,873 )
Depreciation and amortisation 2.6, 3.1 (1,303 ) (1,284 )
Operating profit before other items 4,150
Other income and expenses, net 1.4
(90 )
Royalty (1,110 ) (1,216 )
Amortisation/impairment of customer contracts
3.1
(69 )
(69 )
Operating profit 1.1 2,881 2,602
Financial income 4.2 397
Financial expenses
4.2 (807 )
(610 )
Profit before tax 2,471 2,289
Income tax 5.1 (455 ) (298 )
Net profit from continuing operations 2,016
Net profit from discontinued operations 3.4
(1,725 )
(36 )
Net profit 291
Attributable to:
The owner of ISS Global A/S 245 1,877
Non-controlling interests 46
Net profit 291 1,955
Note
CONSOLIDATED FINANCIAL STATEMENTS 35
Statement of comprehensive income
1 January – 31 December
(DKKm)
Note 2023 2022
Net profit
Items that will not be reclassified to profit or loss:
Remeasurement gain/(loss), defined benefit plans 7.1 (462 ) 208
Asset ceiling, defined benefit plans 7.1 299 (43 )
Tax 5.2 33 (53 )
Items that may be reclassified to profit or loss:
Foreign exchange adjustments of foreign entities 4.1 (438 ) (31 )
Recycling of accumulated foreign exchange adjustments on country exits 4.1 (6 ) (36 )
Hyperinflation restatement of equity at 1 January 7.2 467 814
Fair value adjustments of net investment hedges 4.1 (84 ) (43 )
Tax 4.1 - 10
Other comprehensive income (191 ) 826
Comprehensive income 100 2,781
Attributable to:
The owner of ISS Global A/S 73 2,385
Non-controlling interests 27 396
Comprehensive income 100 2,781
CONSOLIDATED FINANCIAL STATEMENTS 36
Statement of cash flows
At 31 December
(DKKm) Note 2023 2022
Operating profit before other items 4,150 3,811
Operating profit before other items from discontinued operations 3.4 (146 ) (40 )
Depreciation and amortisation 2.6, 3.1 1,350 1,386
Non-cash items related to hyperinflation
7.2 (90 ) (51 )
Share-based payments 42 40
Changes in working capital 2.4 219 407
Changes in provisions, pensions and similar obligations (473 ) (665 )
Other expenses paid (42 ) (31 )
Interest received from companies within the ISS Group 203 83
Interest received 122 85
Interest paid to companies within the ISS Group (11 ) -
Interest paid (575 ) (483 )
Income tax paid (394 ) (338 )
Payments related to royalties (1,071 ) (1,184 )
Cash flow from operating activities
Acquisitions 3.3 (373 ) (325 )
Divestments 3.4 25 587
Acquisition of intangible assets and property, plant and equipment (569 ) (616 )
Disposal of intangible assets and property, plant and equipment 16 28
Change in financial assets 9 (30 )
Cash flow from investing activities (892 ) (356 )
Repayment of lease liabilities
4.2 (778 ) (850 )
Other financial payments, net 4.2 (144 ) (41 )
Changes in debt to companies within the ISS Group, net 4.2 (29 ) 40
Changes in receivables from companies within the ISS Group, net (371 ) 3
Transactions with non-controlling interests (6 ) (7 )
Cash flow from financing activities (1,328 ) (855 )
Total cash flow 1,064 1,809
Cash and cash equivalents at 1 January 5,166 3,427
Total cash flow 1,064 1,809
Foreign exchange adjustments (137 ) (70 )
Cash and cash equivalents at 31 December 4.2, 4.5 6,093 5,166
Free cash flow 2.7 1,819 1,616
CONSOLIDATED FINANCIAL STATEMENTS 37
Statement of financial position
At 31 December
(DKKm) Note 2023 2022
Assets
Intangible assets 3.1, 3.2 16,569 17,246
Right-of-use assets 2.6 2,153 2,345
Property, plant and equipment
2.6 901 891
Receivables from companies within the ISS Group 3,821 3,386
Deferred tax assets 5.2 916 897
Other financial assets 189 449
Non-current assets 24,549 25,214
Inventories 239 231
Trade receivables 2.1 11,354 10,996
Tax receivables 119 145
Receivables from companies within the ISS Group 220 180
Other receivables 2.2 1,494 1,600
Cash and cash equivalents 4.2, 4.5 6,093 5,166
Assets held for sale 3.4 698 32
Current assets 20,217 18,350
Total assets 44,766 43,564
Equity and liability
Equity attributable to the owner of ISS Global A/S 4.1 6,497 6,424
Non-controlling interests 4.1 629 602
Total equity 7,126 7,026
Loans and borrowings 4.2 13,386 15,893
Pensions and similar obligations 7.1 1,135 1,185
Deferred tax liabilities 5.2 603 536
Provisions 2.5 387 465
Non-current liabilities
Loans and borrowings 4.2 3,299 892
Trade and other payables 4.5 7,000 6,757
Tax payables 155 172
Other liabilities 2.3 9,967 10,022
Provisions 2.5 359 606
Liabilities held for sale 3.4 1,349 10
Current liabilities 22,129 18,459
Total liabilities 37,640 36,538
Total equity and liabilities 44,766 43,564
CONSOLIDATED FINANCIAL STATEMENTS 38
Statement of changes in equity
1 January – 31 December
(DKKm)
Note
Share
capital
Retained
earnings
Translation
reserve
Total
Non-con-
trolling
interests
Total
equity
2023
Equity at 1 January
(597 ) 6,424
Net profit - 245
Other comprehensive income 4.1 - (101 ) (71 )
(172 ) (19 ) (191 )
Comprehensive income - 144 (71 ) 73 27 100
Changes in equity - 144
(71 )
Equity at 31 December 180 6,985 (668 ) 6,497 629 7,126
2022
Equity at 1 January
(957 ) 4,039 206 4,245
Net profit -
Other comprehensive income 4.1 -
Comprehensive income -
Changes in equity - 2,025
Equity at 31 December
Attributable to the owner of ISS Global A/S
CONSOLIDATED FINANCIAL STATEMENTS 39
Significant changes and events
In preparing these consolidated financial statements, we considered the impact of this development when making accounting
estimates, most significantly in relation to:
The macroeconomic environment and geopolitical events continued to create uncertainty in 2023.
• Impairment tests, 3.2
• Pensions and similar obligations, 7.1
• Hyperinflation in Türkiye, 7.2
In 2023, the Group's performance and financial position was affected by the significant changes and events highlighted below. A
detailed review of the Group's performance is provided in the Management's Review on pp. 5-15.
Macroeconomic and geopolitical environment
France
In 2023, it was decided to divest ISS France and reposition ISS to only focus on servicing global key account customers. As a
result, the business was classified as held for sale and discontinued operations. On 22 December 2023, we signed a binding
agreement (put option) to divest the business to Onet SA with expected completion in the first half of 2024.
Net profit of the French business for 2023 amounted to DKK (1,685) million, and was presented separately in “Net profit from
discontinued operations”. The result included the impairment loss of DKK 1,257 million recognised at 30 June 2023 and
subsequent impairment losses and fair value adjustments of DKK 201 million.
See 3.2, Impairment tests and 3.4, Discontinued operations, assets held for sale and divestments for further details.
DTAG
Arbitration process
As previously informed, ISS and Deutsche Telekom (DTAG) have certain contractual disagreements and ISS has in 2022 initiated
the establishment of an Arbitration Tribunal under the German Institute of Arbitration (DIS) to decide on these disagreements.
The arbitration proceedings are expected to complete with a final and binding ruling by mid-2025. ISS and DTAG have exchanged
claims against each other, but the outcome of the proceedings remains uncertain.
Management has carefully considered the various aspects of the dispute in making their estimates and judgements, mainly in
relation to provisions and contingent liabilities.
See 2.5, Provisions, contingencies, guarantees and commitments for further details.
Türkiye also continued to be considered a hyperinflationary economy and eligible for accounting in accordance with IAS 29.
Continued uncertainty
Discontinued operations
Rising inflation and interest rates touched certain aspects of our business, such as increasing our cost base, mainly because of
increasing minimum wages and collective wage agreements. To mitigate the effect, we continued to utilise the price adjustment
mechanisms in our customer contracts.
CONSOLIDATED FINANCIAL STATEMENTS 40
Estimates and judgements
Note
Significant accounting estimates
1.2 Revenue
2.5 Provisions
3.2 Impairment tests
3.4
Assets held for sale
5.2 Deferred tax
7.1
Pensions and similar
obligations
Note
Significant judgement
1.2 Revenue
2.2 Other receivables
2.5 Provisions
2.6
Right-of-use assets
3.1 Intangible assets
7.2
Hyperinflation in Türkiye
The Group's significant accounting estimates and judgements in applying the Group's material accounting policies are provided
in the overviews above.
The preparation of the Group’s consolidated financial statements required management to make judgements, estimates and
assumptions that affected the reported amounts of assets, liabilities, income and expenses, the accompanying disclosures,
including contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a
material adjustment to the carrying amount of assets or liabilities in future periods.
Estimates and assumptions are reviewed on an ongoing basis and have been prepared taking macroeconomic and geopolitic
developments into consideration as well as climate-related matters, but still ensuring that one-off effects which are not expected
to exist in the long term do not affect estimation and determination of these key factors, including discount rates and
expectations for the future.
• Cloud-based arrangements – assessment of control and whether configuration/customisation
costs result in an intangible assets costs result in an intangible assets
• Gross or net presentation – assessment of whether ISS acts as the principal or the agent
• Lease term – determining whether extension options are reasonably certain to be exercised
• Impact from increased inflation and discount rates on future salary and pension increases
• Assessment of future taxable profit
• Uncertain tax positions – estimate of the amount required to settle the obligation
• Estimate of fair value less costs to sell
• Software – capitalisation of configuration/customisation costs
• Lawsuits and disputes - assessment of the likely outcome
• Large contracts - assessment of risks and disputes
• Transition and mobilisation costs – assessment of the criteria for capitalisation
• Price index – assessment of which approach to apply in calculating the conversion factor
when restating for hyperinflation, i.e. average year-todate or average month-to-date
• Onerous contracts – assessment of future profitability
• Assumptions for onerous contracts, claims, disputes and legal proceedings
• Key assumptions in impairment test of goodwill and other intangible assets
• Impact from contract modifications and variable consideration
CONSOLIDATED FINANCIAL STATEMENTS 41
Estimates and judgements (continued)
Generally, we do not believe that our profitability, cash flow generation or asset base is significantly exposed to climate risk, which
is based on our general ability to pass on cost increases to customers as evidenced by our relative historic margin stability and on
the fact that we are an asset-light operation with low operational investment needs. This conclusion is supported by our TCFD
assessment.
Climate-related matters
In preparing these consolidated financial statements, management assessed the impact of climate matters and related risks in
relation to 1) the going concern assessment; and 2) in applying significant estimates and assumptions. The assessment included
both transitional risks in the form of increased costs incurred as part of transitioning toward a more sustainable economy, and
physical risks due to specific weather events, such as storms or flooding.
In relation to the latter, management specifically considered the impact of climate-related matters in performing impairment
tests; in estimating cash flow projections for the individual CGUs management considered both transitional risks, i.e. increased
costs resulting from imposed carbon tax and other regulatory requirements, as well as physical risks, such as critical weather
events. As our business model entails performing services at our customers sites, this mainly included an assessment of our
customers' ability to continue their business in the short to medium term.
As a result, it is management's assessment, that climate-related matters 1) will not have a significant impact on the Group’s going
concern assessment, or in the long term (next five years); and 2) did not have a material impact on the Group’s significant
accounting estimates and assumptions applied in these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 42
Operating profit
1.1 Segments
1.1.1 Operating segments
France classified as held for sale and discontinued operations
(DKKm)
Northern
Europe
Central &
Southern
Europe
Asia &
Pacific
Americas
Other
countries
Total
segments
Unallo-
cated/
elimination
Total
Group
2023
Revenue, excl. IAS 29 29,324 24,807 14,229
9,605 783 78,748 (44)
78,704
Hyperinflation restatement - (2)
- - - (2)
- (2)
Revenue 29,324
24,805
14,229 9,605 783 78,746
(44) 78,702
Depreciation and amortisation (543) (493) (132) (121) (4) (1,293) (10) (1,303)
Operating profit before other
items, excl. IAS 29
1,572 1,487 875 489 48 4,471 (273) 4,198
Hyperinflation restatement
- (48)
- - -
(48)
- (48)
Operating profit before other items
1,572 1,439 875 489
48 4,423 (273)
4,150
Operating margin 5.4% 5.8% 6.1% 5.1% 6.1% 5.6% - 5.3%
Operating margin, excl. IAS 29 5.4% 6.0% 6.1% 5.1% 6.1% 5.7% - 5.3%
Other income and expenses, net - (43) 15 (4)
- (32) (58) (90)
Royalty (413) (344) (247) (108) 2 (1,110) - (1,110)
Amortisation/impairment of
customer contracts
(13) (37) (2) (17) - (69) - (69)
Operating profit 1,146 1,015
641 360 50 3,212
(331) 2,881
ISS is a leading, global provider of workplace and facility service solutions operating in 30+ countries. Operations are generally
managed based on a geographical structure in which countries are grouped into regions.
The regions have been identified based on a key principle of grouping countries that share market conditions and cultures.
Countries where we do not have a full country-based support structure (partnership countries) are combined in a separate
segment “Other countries”.
On 9 August 2023, ISS announced its intention to divest the French business, while still retaining global key account customers in
the country. As a result, ISS France (excluding global key accounts) was classified as held for sale and discontinued operations and
excluded from the segment overview below (previously included in Central & Southern Europe). Revenue and operating profit
related to the retained global key accounts was presented in Other countries. Comparative figures have been restated accordingly.
An overview of the grouping of countries into regions is presented in 8.4, Group companies.
CONSOLIDATED FINANCIAL STATEMENTS 43
1.1 Segments (continued)
(DKKm)
Northern
Europe
Central &
Southern
Europe
Asia &
Pacific
Americas
Other
countries
Total
segments
Unallo-
cated/
elimination
Total
Group
2022
Revenue, excl. IAS 29 28,694 21,646 14,012 8,585 795 73,732 (28)
73,704
Hyperinflation restatement - 154 - - - 154 - 154
Revenue 28,694 21,800 14,012 8,585 795 73,886 (28) 73,858
Depreciation and amortisation (557) (473) (147) (97) (4) (1,278) (6) (1,284)
Operating profit before other
items, excl. IAS 29
1,519 1,146 882 445 60 4,052 (212) 3,840
Hyperinflation restatement -
(29)
-
-
- (29) - (29)
Operating profit before other items
1,519
1,117
882
445 60 4,023 (212) 3,811
Operating margin 5.3% 5.1%
6.3% 5.2% 7.6% 5.4% - 5.2%
Operating margin, excl. IAS 29 5.3% 5.3% 6.3% 5.2% 7.6% 5.5% -
5.2%
Other income and expenses, net 62 (15) 160 (124) - 83 (7) 76
Royalty (467) (330)
(280) (131) (8) (1,216) - (1,216)
Amortisation/impairment of
customer contracts
(16) (27) (4) (22) - (69) - (69)
Operating profit 1,098 745 758
168 52 2,821 (219)
2,602
CONSOLIDATED FINANCIAL STATEMENTS 44
1.1 Segments (continued)
1.1.2 Geographical distribution
(DKKm) 2023 2022 2023
2022
UK & Ireland 10,611 10,396 2,218 2,172
US & Canada 7,004 6,387 2,368
2,492
Switzerland
6,383 5,729
2,010
1,950
Germany 5,864
5,556 993 1,016
Australia & New Zealand 5,102
4,868 1,331 1,384
Türkiye 4,833 3,341 1,525 1,519
Spain 4,460 4,130 1,644 1,263
Denmark (country of domicile)
2,994 3,169
806
813
Other countries
2)
31,451 30,282 10,738 11,708
Total 78,702 73,858 23,633 24,317
1)
Excluding deferred tax assets.
2)
Including unallocated items and eliminations.
Accounting policy
Non-current assets
1)
Revenue
The geographical distribution of segment revenue and non-current assets is based on the geographical location of the individual
subsidiary from which the sales transaction originates. Significant countries are defined as countries representing more than 5%
of Group revenue as well as the domicile country, Denmark. No customer comprises more than 10% of Group revenue.
Our segments are managed primarily based on business performance measured by Operating profit. Segment revenue and costs
comprise items that are directly attributable to the individual segments. Unallocated items mainly consist of revenue and cost
relating to the Group’s corporate functions. Decisions on financing (financial income and expenses) as well as tax planning
(income tax) are managed at Group level and are therefore not managed and allocated to segments.
Segment revenue is presented including internal revenue which due to the nature of the business is insignificant and therefore
not disclosed.
CONSOLIDATED FINANCIAL STATEMENTS 45
1.2 Revenue
1.2.1 Performance obligations
(DKKm) 2023 2022
Portfolio revenue 65,731 60,552
Projects and above-base work 12,971 13,306
Total
78,702
73,858
1.2.2 Disaggregation of revenue
(DKKm) 2023
2022
Customer category
Key accounts 56,274 53,827
Large and medium 18,645 16,406
Small and route-based
3,783
3,625
Total 78,702 73,858
Customer segments
Office-based 30,690 29,869
Production-based 18,906 16,985
Healthcare 10,951 9,994
Other 18,155 17,010
Total 78,702 73,858
Core services
Cleaning 33,170 32,805
Technical 18,288 16,577
Food 11,997 10,168
Workplace, incl. Other 15,247 14,308
Total 78,702 73,858
Disaggregation of revenue based on geographical region is disclosed in 1.1, Segments.
Aligned with our strategy to focus on key accounts in three prioritised segments, where we deliver our core services, we
disaggregate revenue based on:
• customer category;
• customer segment;
• core services; and
• geographical region
We believe that these best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by
economic factors.
Revenue is generated from rendering of workplace and facility service solutions. Our services are provided at the customer's site
on a daily basis continuously over the term of the contract. The customer simultaneously receives and consumes the benefits
provided by the Group. Thus, performance obligations are satisfied over time.
Revenue is split between portfolio and projects and above-base work, with the vast majority stemming from portfolio revenue,
84% (2022: 82%).
Portfolio revenue comprises revenue from contracts with customers that is contractually agreed (committed) at inception and
relates to services that we are obligated to render on a recurring basis over the term of the contract. Revenue from projects and
above-base work (e.g. capital projects, events, etc.) is demanded on a non-recurring basis and agreed separately with the
customer.
CONSOLIDATED FINANCIAL STATEMENTS 46
1.2 Revenue (continued)
1.2.3 Costs to fulfil a contract
1.2.4 Revenue backlog
(DKKm) 2023 2022
< 1 year 33% 20,793 33% 20,230
1-5 years 56% 35,356 55% 33,237
> 5 years 11% 7,463
12% 7,352
Total 100% 63,612 100% 60,819
As a result, the amounts disclosed in the maturity table is significantly lower than reported revenue and will likely not reflect the
degree of certainty in future revenue (and cash inflows) to the Group. As a supplement, in the management review, p. 8, a
maturity overview for our largest key accounts (> DKK 200 million of annual revenue) is presented.
Our revenue base consists of a mix of yearly contracts, which are renewed tacitly, and thousands of multi-year contracts, the
majority of which have an initial term of three to five years. Depending on the size and complexity of the contract, the transition
and mobilisation period is normally between six and twelve months for our key accounts. Contracts regularly include options for
the customer to terminate for convenience within three to nine months. However, we maintain a high retention rate of 95%,
both for key accounts and overall, supporting that these options are rarely exercised.
The vast majority of our revenue is portfolio revenue, see 1.2.1, Performance obligations. The remaining part is non-recurring in
the form of projects and above-base work, which is not committed as part of the main customer contract and thus, excluded
from the revenue backlog. In addition, the Group has excluded contracts with a term of less than 12 months and contracts
where the Group invoices a fixed amount for each hour of service provided.
The size and complexity of key account contracts often requires ISS to incur significant transition and mobilisation costs before
service delivery commences in order to be able to fulfil the performance obligations under the contracts.
Transition and mobilisation costs comprise costs, directly related to launching certain large long-term contracts such as transfer
of employees from previous suppliers, site due diligence, planning and developing service plans. The cost includes internal
direct costs and external costs, e.g. to consultants.
At 31 December 2023, capitalised transition and mobilisation costs amounted to DKK 42 million (2022: DKK 36 million). The
increase in 2023 was due to ongoing mobilisation activities for a new contract in the UK, partly offset by ordinary amortisation,
mainly in Denmark, Sweden and the UK.
Capitalised transition and mobilisation costs are presented in 2.2, Other receivables.
CONSOLIDATED FINANCIAL STATEMENTS 47
1.2 Revenue (continued)
Significant accounting estimates and judgements
Accounting policy
1. Fixed price contracts
2. Cost-plus contracts; and
3. Cost-plus variations (typically capped)
Our customer contracts are based on three different commercial models requiring varying levels of management estimates and
judgement in determining the transaction price:
The input method is used to measure progress towards complete satisfaction of the service due to the direct relationship between
labour hours and costs incurred, and the transfer of services to the customer. The Group recognises revenue on the basis of the
labour hours and costs expensed relative to the total expected labour hours and costs to complete the service.
For fixed price contracts, revenue is recognised based on the transaction price stated in the contract, and thus require limited
judgement from management.
Gross or net presentation of revenue Management uses judgement to determine whether the nature of ISS’s promise is to
provide the specified services (ISS is the principal), or to arrange for another party to provide the services (ISS is acting as an
agent). This assessment is based on an evaluation of whether ISS controls the specified services before transfer to the customer.
The Group has concluded that as a main rule ISS is the principal in its revenue arrangements, because it typically controls the
services before transferring them to the customer, and consequently as a main rule recognises revenue on a gross basis.
Revenue from contracts with customers is recognised when control of the services is transferred to the customer. Control is
transferred over time as the customer simultaneously receives and consumes the benefits provided by the Group.
For key accounts and other large contracts, the transaction price may also include a variable consideration based on achievement
of certain key performance indicators and gain share. Management estimates variable consideration based on the most likely
amount to which it expects to be entitled on a contract-by-contract basis. Management makes a detailed assessment of the
amount of revenue expected to be received and the probability of success in each case. Variable consideration is included in
revenue as services are performed to the extent that it is highly probable that the amount will not be subject to significant
reversal.
Services are invoiced on a monthly basis at an amount corresponding to the value of the completed performance obligation.
For cost-plus contracts, including variations e.g. with a cap, ISS’s transaction price is determined based on costs incurred with the
addition of an agreed markup/management fee. Determining the transaction price requires management to assess, which costs
may be included in the calculation basis and if relevant, whether within the capped maximum.
Price adjustment mechanisms in our customer contracts vary in terms of content and extent. Judgement is required by
management to determine the amount of revenue expected to be received as a result of inflationary pressure on costs of delivery.
Contract modifications regularly occur, particularly for key account customers, in order to ensure that service solutions reflect
their current needs. Such modifications are generally agreed with the customer in advance as per the contract in accordance with
a specified change management procedure and accounted for going forward with no impact on recognised revenue up to the
date of modification. Management assess how quickly ISS would be able to implement the scope changes of the service.
CONSOLIDATED FINANCIAL STATEMENTS 48
1.3 Employee costs
(DKKm) 2023 2022
Wages and salaries 39,281 35,929
Social security costs 8,127
7,994
Pensions 7.1 1,397
1,442
Share-based payments
6.2
42
40
Total 48,847 45,405
Average number of employees 334,627 337,667
Number of employees
Government grants
Note
In 2023, employee costs comprised 66% of the total operating costs (2022: 65%).
Average number of employees was 334,627 (2022: 337,667). Including France, average number of employees was 348,751 (2022:
352,540).
Our strategy is based on self-delivery of our core services by our placemakers. Our business model is asset-light and therefore
employee costs is our single largest cost category.
In addition, the Group received Covid-19 grants during the pandemic to compensate costs related to e.g. employees on furlough,
social security contribution and sick pay compensation. With the cessation of the pandemic, the grants have gradually lapsed. In
2023, the Group recognised Covid-19-related grants of DKK 18 million, mainly in Austria and Hong Kong (2022: DKK 122 million
mainly in US, Hong Kong and Sweden).
In 2023, the Group recognised government grants of DKK 184 million (2022: DKK 159 million) in the form of wage subventions,
which have been recognised as a reduction of employee costs. The grants compensate the Group primarily for social security,
wage increases as well as employing certain categories of employees such as trainees, disabled persons, long-term unemployed
and employees in certain age groups.
At 31 December 2023, total number of employees was 352,508 (2022: 350,793). The number of employees includes both the
continuing and discontinued operations. Once the divestment of France is completed, the number of employees will be reduced
with around 15,000 employees.
CONSOLIDATED FINANCIAL STATEMENTS 49
1.4 Other income and expenses, net
(DKKm) 2023 2022
Gain on divestments 16 225
Other income 16 225
Loss on divestments (32) (124)
Integration costs (8) (7)
Acquisition costs (8) (4)
Other (58) (14)
Other expenses (106) (149)
Other income and expenses, net (90) 76
Accounting policy
Other income and expenses, net consists of recurring and non-recurring items that management does not consider to be part of
the Group’s ordinary operating activities, i.e. gains and losses on divestments, remeasurement of disposal groups classified as
held for sale, the winding-up of operations, disposal of property and acquisition and integration costs.
Gain on divestments mainly related to the landscaping and the sanitation services businesses in Singapore. In 2022, the gain
mainly related to the waste management business in Hong Kong and the damage control business in the UK.
Loss on divestments mainly related to the security and the technical services businesses in Spain. In 2022, the loss comprised a
withdrawal liability on a multiemployer plan in the US related to the divestment of Specialized Services in December 2021.
Acquisition costs mainly related to the acquisition of Grupo Fissa in Spain (2022: Livit FM Services AG).
Other income and expenses, net are presented separately from the Group's ordinary operating activities as management
believes that this best reflects the Group's financial performance.
Integration costs related to the acquisition of Grupo Fissa in Spain and Livit FM Services AG in Switzerland (2022: Livit FM Services
AG).
Other comprised a fair value adjustment of a contingent consideration associated with the transaction in Türkiye in 2021. In 2022,
the loss comprised costs related to winding-up of a minor business in Germany.
CONSOLIDATED FINANCIAL STATEMENTS 50
SECTION 2
Operating assets, liabilities and free cash flow
2.1 Trade receivables and credit risk
2023 2022
(DKKm)
Gross
Expected
credit losses
Carrying
amount
Gross
Expected
credit losses
Carrying
amount
Central & Southern Europe 4,481 (30) 4,451 4,553 (50) 4,503
Northern Europe 3,632 (59) 3,573 3,218 (24)
3,194
Asia & Pacific 2,072 (30) 2,042 2,072 (38)
2,034
Americas 1,194 (8) 1,186 1,171 (12)
1,159
Other countries
102 - 102 106 -
106
Total 11,481 (127) 11,354 11,120 (124) 10,996
Not past due 10,148
(1) 10,147 9,762 (6) 9,756
Past due 1 to 60 days 878 (2) 876 1,073 (4) 1,069
Past due 61 to 180 days 220
(40) 180 179 (14) 165
Past due 181 to 360 days
113 (28)
85
22 (20)
2
More than 360 days 122 (56) 66
84 (80) 4
Total 11,481 (127) 11,354 11,120 (124)
10,996
Expected credit losses
(DKKm)
2023 2022
At 1 January (124) (162)
Foreign exchange adjustments 4 6
(Acquisitions)/Divestments (5) 2
Additions (86) (59)
Unused amounts reversed 52 74
Unrecoverable amounts written off 18
15
Reclass to Assets held for sale
14
-
At 31 December (127) (124)
Development in 2023
In 2023, trade receivables increased to DKK 11,354 million (2022: DKK 10,996 million) generally as a result of high organic growth
driven by implemented price increases and high activity levels at customer sites across the Group. Furthermore, the increase was
driven by Türkiye, where payment cycles are longer than Group average, and by adverse timing effects of certain payments
relating to contractual disputes.
Commercial use of factoring with certain large key account customers and participation in certain customers' supply chain finance
arrangements was DKK 1.4 billion (2022: DKK 1.3 billion) at 31 December 2023.
Expected credit losses comprised 1.1% (2022: 1.1%) of trade receivables (gross) and trade receivables not past due was 89% of
trade receivables, net (2022: 89%).
CONSOLIDATED FINANCIAL STATEMENTS 51
2.1 Trade receivables and credit risk (continued)
Exposure to credit risk
- low exposure
Risk management
Accounting policy
Factoring and participation in customers’ supply chain finance arrangements (factoring) are mainly used to optimise cash
collection and to finance working capital impacts related to growth with certain key account customers, including from general
pressure for longer payment terms and necessary investments in transition and mobilisation of such contracts. Trade receivables
subject to factoring agreements are derecognised once the derecognition criteria have been met and all substantial risks and
rewards have been transferred to the factor. Once the trade receivables have been derecognised, the Group does not carry any
risk and has no continuing involvement in these trade receivables.
The Group’s exposure to credit risk is inherently low due to its business model and strategic choices leading to a diversified
customer portfolio, both in terms of geography, industry sector, customer size and services.
Generally, the Group does not hold collateral as security for trade receivables.
Expected credit losses are calculated using a provision matrix. The provision rates are based on days past due for grouping of
customers with similar loss patterns, e.g. by geographical region, customer type and rating. The calculation reflects reasonable
and supportable information about past events, current conditions and forecasts of future economic conditions.
Trade receivables comprise invoiced and unbilled revenue. Unbilled revenue represents service deliveries where the performance
obligation has been fulfilled, but not yet invoiced. Trade receivables are recognised at the invoiced amount less expected credit
losses, which equals amortised costs due to their short term nature.
Trade receivables are generally written off if they are past due more than 180 days or when there is no reasonable expectation of
recovery. Write-offs are presented in Other operating expenses. Subsequent recovery of write-offs or reversal of expected credit
losses are credited against the same line item.
In 2023, we continued to manage inflation rates tightly through price increases. The vast majority of cost increases were passed
on to customers as per the agreed contractual terms with no increase in credit losses.
We have a strong ongoing assessment and monitoring of customers' creditworthiness and the credit limits are set as deemed
appropriate taking into account the customer’s financial position and the current market conditions.
Exposure to credit risk and expected credit losses are managed locally in the operating entities.
CONSOLIDATED FINANCIAL STATEMENTS 52
2.2 Other receivables
(DKKm)
2023 2022
Supplier rebates and bonuses 434 424
Prepayments to suppliers 294 297
Securities 117 104
Receivable divestment proceeds 114 114
Sign-on fees 98 110
Transition and mobilisation costs 42 36
Government grants 23 103
Derivatives 24 50
Other 348
362
Total 1,494
1,600
Significant accounting judgement
Other comprised refunds from customers, accrued interest, VAT, employee-related taxes and other recoverable amounts.
Capitalisation of transition and mobilisation costs involves management’s judgement to assess if the criteria for capitalisation are
fulfilled, including determining if the costs relate directly to the contract and are incurred in order for ISS to be able to fulfil the
contract. In addition, management determines if the costs generate resources that will be used in satisfying the performance
obligations and are expected to be recovered, i.e. reflected in the pricing of the contracts.
Transition and mobilisation costs (costs to fulfil a contract) comprise costs directly related to startup of operations of certain large
contracts, e.g. transfer of employees from previous suppliers, site due diligence, planning and developing service plans. The costs
include internal direct costs and external costs e.g. to consultants.
Bid-related costs, including costs relating to sales work and securing contracts, are expensed as incurred.
Government grants related to various receivables, mainly wage subventions in Spain.
Transition and mobilisation costs comprised costs to fulfil the performance obligation under certain large contracts, see 1.2.3,
Costs to fulfil a contract. The increase in 2023 was due to ongoing mobilisation activities for a new contract in the UK, partly offset
by ordinary amortisation, mainly in Denmark, Sweden and the UK.
Prepayments to suppliers comprised various payments mainly related to IT licences, utilities and insurance.
Supplier rebates and bonuses comprised volume related discounts obtained from suppliers and reflects the Group’s efforts to
consolidate the number of suppliers and drive synergies and cost savings.
Sign-on fees comprised upfront discounts to certain large customers incurred in the normal course of business, most significantly
in the UK and on certain global key accounts.
Receivable divestment proceeds mainly mainly related to the divestment of Specialized Services in the US, where part of the
consideration is deferred.
Securities related to a savings plan in the US administered by ISS on behalf of certain senior employees.
CONSOLIDATED FINANCIAL STATEMENTS 53
2.2 Other receivables (continued)
Accounting policy
2.3 Other liabilities
(DKKm)
2023 2022
Accrued wages, pensions and holiday allowances 5,060
5,389
Tax withholdings, VAT etc.
1,768
1,666
Debt to companies within the ISS Group 1,611 1,410
Prepayments from customers 989 805
Savings plan 117 104
Derivatives 70 130
Contingent consideration and deferred payments 29 12
Other 323 506
Total
9,967
10,022
2.4 Changes in working capital
(DKKm)
2023 2022
Changes in inventories
(24) (61)
Changes in receivables (764) (870)
Changes in payables 1,007 1,338
Total 219 407
Other comprised customer discounts, accrued interests, etc.
Except for the items described below, other receivables are recognised initially at cost and subsequently at amortised cost. Due to
the short-term nature of other receivables, amortised cost will equal the cost.
Savings plan related to a plan in the US under which ISS has invested in securities, see 2.2, Other receivables. The plan is
administered by ISS on behalf of certain senior employees. ISS invests in securities.
Sign-on fees and transition and mobilisation costs are capitalised and amortised over the initial secured contract term consistent
with ISS’s transfer of the related services to the customer.
Securities and derivatives are measured at fair value with fair value adjustments being recognised in profit or loss. The fair value of
derivatives is presented in Other receivables when the fair value is positive and in Other liabilities when the fair value is negative.
Other receivables comprise various items of different nature and thus different measurement methods are applied. As these items
are considered individually immaterial, they are presented together as Other receivables.
In 2023, other liabilities decreased mainly due to reclassification of France as being held for sale. The decrease was partly offset by
tax withholdings, VAT etc. and prepayments from customers, mainly driven by the revenue growth in 2023.
CONSOLIDATED FINANCIAL STATEMENTS 54
2.5 Provisions, contingencies, guarantees and commitments
2.5.1 Provisions
Legal claims and disputes
Self-insurance
Restructurings
Onerous contracts
Other
The provision covers unavoidable costs for certain loss-making contracts. The continued high inflation and resulting cost
increases in 2023, was generally managed through price increases and cost reductions, and did not lead to identification of any
significant new onerous contracts or increased provision for contracts already recognised as onerous.
In 2023, the decrease of DKK 51 million was primarily due to utilisation of the provision for a key account contract in Hong Kong.
Furthermore, in the UK and Austria improvement initiatives on a few minor loss-making contracts led to reversal of amounts
provided in prior years.
In 2023, the provision decreased to DKK 225 million (2022: DKK 410 million) mainly due to utilisations and reassessments related
to customer disputes and contract-related risks. At 31 December 2023, the provision mainly related to customer disputes and
contract risks in the US and Germany.
The provision comprises various other risks and obligations incidental to our business, most significantly related to customer and
contract-related risks and disputes, acquisitions, divestments and decommissioning liabilities.
The provision mainly relates to employers’ liability and/or workers compensation in certain countries and covers claims by
employees for medical benefits and lost wages associated with injuries/illness incurred in the course of their employment.
• Hong Kong: DKKm 25.9 (2022: DKKm 26.8) yearly
•
UK:
DKKm 25.7 (2022: DKKm 25.2) yearly aggregated limit and DKKm 4.3 (2022: DKKm 4.2) per claim
•
Australia:
DKKm 4.6 (2022: DKKm 4.7) per claim
•
US:
DKKm 3.4 (2022: DKKm 3.5) per claim
The provision also includes obligations not covered by the global general business liability insurance in relation to damage
caused in the ordinary course of service delivery, e.g. property damage and bodily injury. The Group is self-insured for claims
below DKK 7.5 million (EUR 1 million per claim).
The provision mainly relates to restructuring projects in several countries. Such projects are conducted in the ordinary course of
our business to ensure continuous optimisation and adjustment of our cost base involving mainly overhead reductions, including
termination of employees. In 2023, projects were initiated and executed in several countries and at Group level mainly as part of
the OneISS strategic review, which resulted in additions of DKK 158 million and payments of DKK 150 million. The latter was
mainly in relation to severance payments in Germany.
The relevant countries, including self-insurance limits are listed below:
ISS is exposed to various risks and uncertainties, and party to certain disputes, claims, investigations and legal proceedings
arising out of the normal conduct of its business. These are mainly within:
• Commercial/contractual matters
• Labour-related
• Divestments and M&A
• Tax/social regulations
Provisions are recognised in relation to such obligations for probable losses, that management deems reasonable and
appropriate at 31 December 2023 as reflected in the table to the right. In addition, ISS is exposed to possible obligations in
relation hereto, see 2.5.2, Contingencies.
The provision primarily relates to labour-related claims and disputes regarding wages, overtime, holiday, pensions, severance
etc., claims and disputes in relation to contractual disagreements with customers and suppliers as well as sales and service tax
disputes. In addition, the provision includes claims and disputes associated with our divestment activities. Such claims and
disputes arise out of the normal conduct of business. In 2023, the decrease was primarily due to settlement of a labour-related
dispute in the UK. At 31 December 2023, the remaining provision concerned predominantly Hong Kong, the US, and Norway.
CONSOLIDATED FINANCIAL STATEMENTS 55
2.5 Provisions, contingencies, guarantees and commitments (continued)
(DKKm)
Legal claims
and disputes
Self-
insurance
Restruc-
turings
Onerous
contracts
Other Total
2023
At 1 January 268
245
71 77 410 1,071
Foreign exchange adjustments -
(8)
- (1) (2) (11)
Additions 66
198
158 14 10 446
Used during the year (140) (203) (150) (28) (41) (562)
Unused amounts reversed (76) (32) - (19) (138) (265)
Acquisitions -
3 - 4 - 7
Reclass to Liabilities held for sale (48)
- - - - (48)
Reclass (to)/from other liabilities 88
60 (5) (21) (14)
108
At 31 December 158
263 74 26 225
746
Non-current
78
154 1 5
149
387
Current
80
109 73 21 76 359
2022
At 1 January 235
262 374 330 515 1,716
Foreign exchange adjustments (9) 6 - 3 4 4
Additions 109
142 6 15 99 371
Used during the year (41)
(149) (263) (191) (90) (734)
Unused amounts reversed (28)
(15) (46) (80)
(8) (177)
Reclass (to)/from other liabilities 2 (1) -
- (110) (109)
At 31 December 268 245 71
77 410 1,071
Non-current 47 129 - 23 266 465
Current 221 116
71 54 144
606
Significant accounting estimates and judgement
Due to our strategic focus on key accounts, our customer base contains a large number of larger complex contracts in terms of
performance obligations towards our customers. Additionally, the size and complexity of such contracts often requires ISS to
incur significant transition and mobilisation costs before service delivery commences to enable fulfilment of the performance
obligations. Furthermore, complex restructuring projects may need to be initiated and recognised as a provision.
Onerous contracts Management assesses whether contracts may be onerous by estimating the expected future profitability. This
involves estimating total contract revenue and the unavoidable costs of meeting the performance obligations under the contract,
including any transition and mobilisation costs incurred. In estimating the expected future profitability, management makes
judgements, including in relation to termination and extension options.
Certain contracts are large, complex and longer-term facility service partnerships. In estimating unavoidable costs in relation to
such contracts, management makes assumptions around future realisation of costs taking estimated optimisations and efficiency
gains from improvement initiatives into consideration. While ISS has inherent risk in this respect, ISS is by nature also dependent
on aligning interest with the customer within the framework of the agreement for the benefit of both parties. The outcome may
vary significantly should the assumptions and judgements applied not be realised as expected by management and applied as
basis for their assessment of whether a contract is onerous.
Restructurings and other provisions Management makes judgements related to various other matters and obligations, primarily
relating to planned/initiated restructurings, and complex customer and contract-related risks and disputes, including ongoing
lawsuits. Management’s assessment of the likely outcome of lawsuits, etc., is based on external legal assistance and established
precedents.
For large, complex contracts, the outcome may vary significantly should the judgements and assumptions applied by
management in their assessment of the risks and disputes not be realised as expected.
CONSOLIDATED FINANCIAL STATEMENTS 56
2.5 Provisions, contingencies, guarantees and commitments (continued)
2.5.2 Contingencies
Contractual disagreements
Labour-related risks
Divestments
Restructurings
Sales and consumption tax disputes
Restructuring projects are being undertaken on an ongoing basis across different geographies and service areas, currently
mainly in Germany, France and Spain. Labour laws especially in Europe include restrictions on dismissals and procedural rules to
be followed. The procedures applied by ISS could be challenged in certain jurisdictions resulting in disputes and possibly
liabilities. Management believes that this would not have a material impact on the Group’s financial position beyond the assets
and liabilities already recognised at 31 December 2023.
The Group is currently party to certain labour-related claims, disputes and legal proceedings, e.g. around wages, overtime,
holiday and severance. Additionally, the Group is aware of certain legal rulings implying that practices applied by ISS could
potentially be challenged and possibly lead to liabilities in the future. Management believes that these would not have a material
impact on the Group’s financial position beyond the assets and liabilities already recognised at 31 December 2023.
The Group makes provisions for claims from purchasers or other parties in connection with divestments and the representations
and warranties given in relation to such divestments. In addition, the Group’s divestment activities can give rise to possible
obligations, mainly labour-related, including pension plans, and related to disputes in relation to sales price.
Contractual disagreements with customers arise on a recurring basis in the ordinary course of ISS’s business. While most are
resolved as part of the daily contract management procedures, in some cases the contractual disagreements will lead to legal
proceedings.
The Group is currently party to certain disputes and legal proceedings, including in relation to the contract with Deutsche
Telekom (DTAG). As previously informed, ISS has initiated the establishment of an Arbitration Tribunal under the German
Institute of Arbitration (DIS) to decide on the contractual disagreements between ISS and DTAG. The arbitration proceedings are
expected to complete with a final and binding ruling by mid-2025. In the proceedings ISS and DTAG have exchanged claims
against each other. ISS has claimed remuneration for services rendered. DTAG has disputed the claims and is currently
withholding certain payments to ISS related to the services rendered. The outcome of the proceedings remains uncertain.
Being a global company operating in various regulatory jurisdictions exposes us to varying and changing laws and regulations,
including interpretations from authorities on sales and consumption taxes. Although we have policies and procedures in place to
ensure that we comply with current regulations, interpretations and procedures applied by ISS could be challenged in certain
jurisdictions and result in disputes and possibly liabilities and future cash outflows. The Group is currently party to certain
disputes, mainly in relation to VAT on canteen services in Norway.
Being a people company operating across different geographies and service areas exposes us to varying and changing labour
laws, including regulations on pension schemes, especially across Europe. Although we have policies and procedures in place to
ensure that we comply with current regulations, interpretations and procedures applied by ISS could be challenged in certain
jurisdictions and result in disputes and possibly liabilities.
ISS is party to pending disputes, claims, investigations and litigations arising out of the normal conduct of its business and is
therefore exposed to possible obligations. Management believes that these will not have a material impact on the Group’s
financial position beyond the assets and liabilities recognised in the statement of financial position at 31 December 2023.
However, the existence of such possible obligations will only be confirmed by the occurrence of future events, not entirely within
ISS’s control. Due to the inherent uncertainty, future events may lead to material adverse effects on the Group’s profit or loss,
financial position and cash flows from one or more of these possible obligations.
CONSOLIDATED FINANCIAL STATEMENTS 57
2.5 Provisions, contingencies, guarantees and commitments (continued)
2.5.3 Guarantees
(DKKm)
2023
2022
Bank-guaranteed performance bonds 1,627
1,755
Other performance bonds
4,824
3,131
Performance guarantees (service contracts) 6,451 4,886
( )
575 472
( )
Performance guarantees
Indemnity and guarantee commitments
Guarantee related to the revolving credit facility
2.5.4 Commitments
(DKKm)
2023
Licenses 49
Leases 60
Purchase obligations, suppliers and subcontractors 29
Total not recognised 138
( )
Non-current 58
Current 80
Leases relates to various contracts not yet commenced at 31 December 2023, but entailing obligations for future lease payments.
ISS has issued certain guarantees in the normal course of business.
ISS regularly issues performance guarantees to customers to guarantee satisfactory completion of work in accordance with the
service contract. Such guarantees are issued in the ordinary course of business, either in the form of bank guarantees, parent
guarantees or insurances. The increase in Other performance bonds related mainly to a new contract in the UK.
Other guarantees are mainly issued to insurance companies towards self-insurance liabilities as well as to owners of rental
property occupied by ISS in certain countries. Furthermore, in a few instances guarantees have been issued to public authorities
towards tax withholding liabilities.
Indemnity and guarantee commitments
The Group entered into multi-year software license agreements with non-cancellable obligations to pay future license fees.
The Group has entered into various contractual agreements under which the Group is obligated to pay a continued fee in the
short to long term.
Furthermore, the Group entered into contracts with a limited number of suppliers and subcontractors that contain future
purchase obligations.
ISS Global has issued a guarantee related to ISS A/S's and ISS World Services A/S's possible draw on the revolving credit facility of
EUR 900 million. The facility was unused at 31 December 2023.
CONSOLIDATED FINANCIAL STATEMENTS 58
2.5 Provisions, contingencies, guarantees and commitments (continued)
Accounting policy
Provisions
Contingencies and commitments
Decommissioning liability (presented in "Other" provisions) if the Group has a legal obligation to dismantle or remove an asset or
restore a site or leased facilities when vacated. The present value of the obligation is included in the cost of the relevant tangible
or right-of-use asset and depreciated accordingly. The estimated future costs of decommissioning are reviewed annually and
adjusted as appropriate. Changes in the estimated future costs, or in the discount rate applied, are added to or deducted from
the cost of the relevant asset.
Onerous contracts, when the unavoidable costs, including directly allocated overhead costs, of meeting the obligations under the
contract exceed the economic benefits expected to be received under it, corresponding to the lower of the costs to fulfil the
obligations under the contract and the costs of exiting the contract.
Provisions are recognised at the estimated costs when the Group, as a result of a past event, has a legal or constructive
obligation and it is probable that an outflow of economic benefits will be required to settle the obligation. The amount is
discounted using the Group’s average borrowing rate, if this significantly impacts the measurement of the liability. Provisions are
recognised for:
Customer and contract-related disputes (presented in "Other" provisions) based on an assessment of available facts and
circumstances in respect of the specific risks or disputes, when it is deemed that a contractual, non-contractual or constructive
obligation exists, and it is probable that this will lead to an outflow of economic resources from the Group.
Restructurings when a detailed, formal restructuring plan is announced to the affected parties on or before the reporting date.
The plan must identify the business concerned, the location and number of employees affected, and a detailed estimate of the
associated costs, as well as the timeline must be in place.
Contingent liabilities and commitments do not represent a legal or constructive obligation. Thus, they are not recognised, but
disclosed in the notes.
Legal claims and disputes, e.g. lawsuits and other disputes, based on external legal assistance and established precedents.
Self-insurance on employers’ liability and/or workers compensation based on valuations from external actuaries.
Contingent liabilities are possible of nature as the existence of the obligation will be confirmed by the occurrence or non-
occurrence of future events. An obligation may also be contingent if the amount cannot be estimated reliable or settlement is not
probable.
Commitments is the Group’s promise resulting from a contractual agreement to assume a future obligation for a future delivery.
CONSOLIDATED FINANCIAL STATEMENTS 59
2.6 Right-of-use assets and property, plant and equipment
(DKKm)
Properties Vehicles Other
Total
2023
Cost at 1 January 2,562 1,399 706 4,667 3,206
Foreign exchange adjustments 19 (2) (78) (61) (84)
Hyperinflation restatement 2 20 70 92 104
Additions 258 438 210 906 392
Acquisitions (5) - - (5) 4
Divestments - (6) - (6) (6)
Disposals (236) (322) (87) (645)
(395)
Reclass to Assets held for sale (180) (87) (71) (338)
(159)
- - (15) (15) 15
Cost at 31 December 2,420 1,440 735 4,595 3,077
Depreciation at 1 January (1,232) (764) (326) (2,322) (2,315)
Foreign exchange adjustments (10) 1 32 23 51
Hyperinflation restatement - (7) (17) (24) (57)
Impairment (141) (36) (33) (210) (38)
Depreciation (382) (352) (159) (893) (344)
Divestments - 2 - 2
4
Disposals 236 322 87 645 379
Reclass to Assets held for sale 180 82 60 322 159
Reclass - - 15
15 (15)
Depreciation at 31 December (1,349) (752) (341)
(2,442) (2,176)
Carrying amount at 31 December 1,071 688 394
2,153
901
2022
Cost at 1 January 2,484 1,296 577 4,357
3,381
Foreign exchange adjustments 4 (9) (34) (39) (39)
Hyperinflation restatement - 20 57
77 183
Additions 264 309 187
760
344
Acquisitions
5 34 - 39
7
Divestments -
- - - (16)
Disposals (195) (251) (81) (527)
(654)
Cost at 31 December 2,562 1,399 706 4,667 3,206
Depreciation at 1 January (1,038) (663) (279) (1,980) (2,485)
Foreign exchange adjustments (1) 7 18 24 31
Hyperinflation restatement - (7) (13)
(20) (107)
Impairment - - - - (22)
Depreciation (388) (352) (133)
(873) (373)
Divestments - -
- - 15
Disposals 195 251 81 527 626
Depreciation at 31 December (1,232) (764) (326) (2,322) (2,315)
Carrying amount at 31 December 1,330 635 380
2,345 891
Right-of-use assets
Property,
plant and
equipment
Lease liabilities For carrying amount, see 4.2.1, Loans and borrowings. For maturity, see 4.5.1, Financial liabilities.
Reclass
CONSOLIDATED FINANCIAL STATEMENTS 60
2.6 Right-of-use assets and property, plant and equipment (continued)
2.6.1 Right-of-use assets
Lease-related costs
(DKKm)
2023
2022
Depreciation of right-of-use assets 866
815
Interest expenses on lease liabilities 121
78
Leases of low-value assets
138
182
Short-term leases
49 66
Variable lease payments 7 11
Recognised in profit or loss 1,181 1,152
Hereof cash outflow 315 337
2.6.2 Property, plant and equipment
Significant accounting judgement
Lease term Several of ISS’s lease contracts (office buildings) have no contractual fixed lease term or contains an extension option.
Management exercises judgement in determining whether these extension options are reasonably certain to be exercised.
Management considers all relevant facts and circumstances that create an economic incentive for the Group to exercise the
extension option.
The lease term for contracts without an end date is normally set to ten years for head office and accessory buildings, whereas all
other leases with no definite end date are set to five years.
ISS is a people business operating based on an asset-light business model. Operating assets (leased and owned) comprised only
7% of the Group’s total assets at 31 December 2023 (2022: 7%). Our model is mainly based on leasing, rather than owning,
property, vehicles and equipment.
At 31 December 2023, ISS was party to around 17,500 (2022: 18,500) lease agreements of which the majority related to vehicles.
In terms of asset value, the main part related to property. Additions was DKK 906 million in 2023 (2022: DKK 760 million). The
increase was mainly driven by new production equipment and vehicle leases in Belgium related to a new contract whereas other
countries were broadly in line with 2022.
Consists mainly of production equipment and leasehold improvements. In 2023, additions of DKK 392 million (2022: DKK 344
million) primarily related to equipment for new and existing contracts, and leasehold improvements.
CONSOLIDATED FINANCIAL STATEMENTS 61
2.6 Right-of-use assets and property, plant and equipment (continued)
Accounting policy
Properties 5-10 years
Vehicles 3-5 years
Other equipment 2-5 years
Plant and equipment 3-10 years
Leasehold improvements (lease term)
Buildings 20-40 years
Land Not depreciated
Right-of-use assets are recognised at the commencement date of the lease and measured at cost less accumulated depreciation
and impairment losses, and adjusted for any remeasurement of lease liabilities, including extension options.
Certain leases have a term of 12 months or less or are leases of low-value assets, such as minor cleaning and IT equipment and
office furniture. The recognition exemptions are applied for these leases and lease payments are recognised in Other operating
expenses on a straight-line basis over the lease term.
Estimated useful life
Certain leases comprise a liability to dismantle or remove the asset or restore the facility. Cost related to such liability is
recognised as part of the cost of the right-of-use asset.
Right-of-use assets are depreciated on a straightline basis over the shorter of the lease term and the estimated useful life of the
asset.
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
Gains and losses arising on the disposal or retirement of property, plant and equipment are recognised in Other operating
expenses in the year of sale, except gains and losses arising on disposal of property, which are recognised in Other income and
expenses, net.
Property, plant and equipmentis measured at cost, less accumulated depreciation and impairment losses.
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
3-10 years
Estimated useful life
Certain assets comprise a liability to dismantle or remove the asset or restore the site. Cost related to such liability is recognised
as part of the cost of the asset.
Property, plant and equipment is depreciated on a straight-line basis over the estimated useful lives of the assets.
CONSOLIDATED FINANCIAL STATEMENTS 62
2.7 Free cash flow
(DKKm)
Note 2023 2022
Cash flow from operating activities 3,284 3,020
Acquisition of intangible assets and property, plant and equipment (569) (616)
Disposal of intangible assets and property, plant and equipment 16 28
Change in financial assets
1)
(6) (52)
Addition of right-of-use assets, net 2.6 (906) (764)
Free cash flow 1,819 1,616
The free cash flow measure should not be considered a substitute for those measures required by IFRS and may not be calculated
by other companies in the same manner. As such, reference is made to the IFRS measures included in the consolidated statement
of cash flows of the consolidated financial statements.
1)
Excluding changes in equity-accounted investees which in 2023 was DKK (15) million (2022: DKK (22) million).
Free cash flow as defined by management, see 8.5, Definitions, is summarised below. Free cash flow is not a financial performance
measure defined by IFRS. Accordingly, the measure and its calculation is presented as it is used by management as an alternative
performance measure in managing the business.
CONSOLIDATED FINANCIAL STATEMENTS 63
SECTION 3
Strategic investments and divestments
3.1 Intangible assets
(DKKm)
Goodwill Brands
Customer
contracts
Software Total
2023
Cost at 1 January 18,273 59 4,294 1,587 24,213
Foreign exchange adjustments (340) (2) (194) (12) (548)
Hyperinflation restatement 337 - 183 4
524
Additions - - -
166
166
Acquisitions
221 - 136
-
357
Divestments (4) - (12) - (16)
Disposals - - - (175)
(175)
Reclass to Assets held for sale (2,146) - (68) (192)
(2,406)
Cost at 31 December 16,341 57 4,339 1,378
22,115
Amortisation/impairment at 1 January
(2,420) (59) (3,437)
(1,051)
(6,967)
Foreign exchange adjustments
(9) 2 31 8 32
Hyperinflation restatement
-
-
(10)
(2) (12)
Amortisation - - (69) (113)
(182)
Impairment
(937) - -
(72) (1,009)
Divestments -
- 12 - 12
Disposals - - - 174
174
Reclass to Assets held for sale 2,146 - 68 192 2,406
Amortisation/impairment at 31 December (1,220) (57) (3,405) (864) (5,546)
Carrying amount at 31 December 15,121 - 934
514 16,569
2022
Cost at 1 January
17,492 53 4,039 1,445
23,029
Foreign exchange adjustments (35)
6 (47) (8) (84)
Hyperinflation restatement 644 - 235 5
884
Additions - - - 263 263
Acquisitions 203 - 161 - 364
Divestments (30) - (1)
(2) (33)
Disposals
- - (93) (116)
(209)
Cost at 31 December
18,274
59
4,294 1,587 24,214
Amortisation/impairment at 1 January (2,429)
(49) (3,442) (1,054) (6,974)
Foreign exchange adjustments 8 (6)
(22) 7 (13)
Hyperinflation restatement - - (2) (3) (5)
Amortisation - (4) (65) (115) (184)
Impairment -
- - (3) (3)
Divestments - - 1 2 3
Disposals - - 93 115 208
Amortisation/impairment at 31 December (2,421) (59) (3,437) (1,051)
(6,968)
Carrying amount at 31 December 15,853 - 857 536
17,246
CONSOLIDATED FINANCIAL STATEMENTS 64
3.1 Intangible assets (continued)
Goodwill and customer contracts
Software
Significant accounting judgement
In SaaS (Software as a Service) arrangements, where the provider controls the software application, the assessment of whether
configuration or customisation of the software results in an intangible asset for the Group depends on the output of the
configuration or customisation activities performed.
In line with the Group’s strategic ambition of becoming the technology leader in the industry, we continued investing in software,
e.g. digital applications for our customers and employees as well as cybersecure infrastructure. In 2023, additions amounted to
DKK 166 million (2022: DKK 263 million), the majority related to Group-wide systems and applications.
Cloud-based arrangement At the commencement date, management assesses whether the Group acquires an intangible asset, a
leased asset or receives a service over the term of the contract. If the Group receives a right to access the cloud provider's
application without further rights or control it is neither a lease nor an intangible asset. However, the Group may acquire an
intangible asset if the Group has the contractual right to take possession of the software during the contract period without
significant penalty and it is feasible for the Group to run the software on its own hardware or with another cloud provider.
Part of the activities undertaken may entail the development of software code that enhances or modifies, or creates additional
capability to the existing on-premise software to enable it to connect with the cloud-based software applications. If activities are
performed on the Group’s infrastructure and applications, they likely represent assets that the Group controls because they
enhance, improve or customise existing software assets.
In 2023, the Group acquired Grupo Fissa adding DKK 217 million to goodwill and DKK 136 million to customer contracts. Further
details are provided in 3.3, Acquisitions. Goodwill relates mainly to assembled workforce, technical expertise and know how.
In 2023, the goodwill impairment of DKK 937 million (2022: DKK 0 million) related to France, and recognised in Net profit from
discontinued operations, see 3.2, Impairment tests.
CONSOLIDATED FINANCIAL STATEMENTS 65
3.1 Intangible assets (continued)
Accounting policy
Customer contracts 10-24 years
Software 3-10 years
Configuration and customisation activities undertaken in implementing SaaS arrangements may give rise to a separate asset, i.e.
the development of a software code that enhances, modifies or creates additional capability to the Group’s existing on-premise
systems. Costs incurred for these activities rerecognised as intangible assets if they meet the recognition criteria and amortised
over the useful life of the software.
Amortisation is calculated on a straight-line basis over the estimated useful lives except for certain customer contracts where the
unit of production method better reflects the expected pattern of consumption.
Estimated useful life
Goodwill is not amortised but recognised at cost less accumulated impairment losses.
Acquisition-related customer contracts are recognised at fair value at the acquisition date and subsequently, at cost less
accumulated amortisation and impairment losses.
Software is measured at cost less accumulated amortisation and impairment losses. The cost of software developed for internal
use includes external costs to consultants and software as well as internal direct costs related to the development. Other
development costs for which it cannot be demonstrated that future economic benefits will flow to the Group are recognised in
profit or loss.
Amortisation methods and useful lives are reassessed at the reporting date.
Cloud-based arrangements Software within a cloud-based arrangement is recognised as either an intangible asset, a leased
asset or as a service received (Software as a Service) based on the contract and facts and circumstances of the software. Software
as a Service (SaaS) arrangements are service contracts providing the Group with the right to access a cloud provider's application
software over the contract term.
Costs incurred to configure or customise, and the ongoing fees to obtain access to the cloud provider’s application software, are
recognised as Other operating expenses when the services are received. Also, internal costs such as costs related to selection of
cloud provider, data conversion, training and testing are expensed in Other operating expenses.
CONSOLIDATED FINANCIAL STATEMENTS 66
3.2 Impairment tests
3.2.1 Impairment test results
France
Türkiye
The outcome of the impairment test may vary significantly should the assumptions, estimates and judgements not be realised as
expected and applied as basis for management’s conclusion of whether impairment of a CGU has occurred.
In the first six months of 2023, ISS worked diligently on implementing the business improvement plan from December 2022.
However, in evaluating the H1 2023 operational performance and the status of the business, it was concluded that significant
profitability improvements could not be achieved on a stand-alone basis without further restructurings and additional
investments. Accordingly, management lowered its expectations in the forecasting and terminal period as explained in note 7,
Impairment tests in the Interim Report for H1 2023. This resulted in recognition of an impairment loss at 30 June 2023 amounting
to DKK 1,257 million of which DKK 937 million related to goodwill and DKK 320 million related to other non-monetary assets.
Subsequently, on 9 August 2023 ISS announced its intention to divest ISS France resulting in reclassification as held for sale and
discontinued operations as of this date. Consequently, results of ISS France, including the impairment loss recognised at 30 June
2023, was reclassified to “Net profit from discontinued operations” in the profit or loss statement, see 3.4, Discontinued
operations, assets held for sale and divestments for additional information.
The impairment tests of goodwill, customer contracts and brands performed at 31 December 2023 did not result in recognition of
impairment losses (2022: no impairment losses). It is management’s view that excess values in the Group’s CGUs are fairly resilient
to any likely and reasonable deteriorations in the key assumptions applied, see sensitivity analyses in 3.2.2, Goodwill and customer
contracts.
In 2023, ISS Türkiye continued to perform well in terms of revenue growth, operating margin and improved free cash flow despite
the difficult macroeconomic environment with continued high inflation and significantly increasing interest rates. However, due to
the IAS 29 hyperinflation adjustments goodwill and customer contracts also continued to increase significantly. At 31 December
2023, intangibles amounted to DKK 1.3 billion of which DKK 1.0 billion was attributable to hyperinflation.
As a result of the highly unusual macroeconomic situation, the normal Group methodology of applying a constant WACC rate in
both the forecasting and terminal period, would lead to an understatement of the value in use (especially in the terminal period)
due to the disproportionate negative gap between the risk-free interest rate and the consistently applied terminal growth rate.
Instead, the Group has applied a normalised WACC rate in the terminal period, while the WACC applied in the forecasting period
continues to be determined based on the normal Group methodology. Given the circumstances, it is management’s view that this
is more appropriate and leads to a more reasonable estimate of the value in use in Türkiye.
Significant accounting estimates
In performing the impairment test, management assesses whether the CGU to which the goodwill relates will be able to generate
positive net cash flows sufficient to support the value of intangibles and other non-current assets. The assessment is based on
estimates of expected future cash flows (value in use) for the individual GCU, which by nature are uncertain.
Estimates are based on financial forecasts for the following year as approved by management, and estimated discount rates,
growth and market developments. Assumptions applied in the short to medium term (forecasting period of five years) as well as
terminal growth rates and margins applied are described in 3.2.4, Determining value in use.
CONSOLIDATED FINANCIAL STATEMENTS 67
3.2 Impairment tests (continued)
3.2.2 Goodwill and customer contracts
(DKKm)
Goodwill
Customer
contracts
Total Goodwill
Customer
contracts
Total
US & Canada 2,125 134 2,259 2,197 155
2,352
UK & Ireland 1,719 88 1,807 1,681 99 1,780
Switzerland
1,512 156 1,668 1,414
157
1,571
Finland 1,656 - 1,656 1,653 - 1,653
Spain 1,224 132 1,356 1,005 1 1,006
Türkiye 858 417 1,275 849 434 1283
Australia & NZ 1,272
- 1,272 1,315 2 1,317
France
1)
- - - 936 - 936
Other 4,755 7 4,762 4,803 9
4,812
Total 15,121 934
16,055
15,853
857 16,710
1)
In June 2023, goodwill in France was fully impaired and the entity was subsequently reclassified as held for sale and discontinued operations.
Accounting policy
The Group performs impairment test of goodwill and the ISS brand at the reporting date or when indications of impairment exist.
Other non-current assets are tested annually for indications of impairment.
When performing the impairment test, the recoverable amount of the asset is determined, i.e. the higher of the fair value of the
asset less anticipated costs of disposal and its value in use. The value in use is calculated as the present value of expected future
cash flows from the asset or the CGU to which the asset belongs.
2023
2022
Impairment of goodwill is not reversed. Impairment of other assets is reversed if estimates used to calculate the recoverable
amount have been changed. An impairment loss is reversed to the extent that the carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation and amortisation, if no impairment loss had been recognised.
Impairment of goodwill is recognised in the statement of profit or loss in a separate line if the carrying amount of an asset or CGU
exceeds its estimated recoverable amount.
The carrying amount of goodwill is tested for impairment together with the other non-current assets in the CGU to which goodwill
is allocated.
The carrying amounts of intangibles for CGUs representing more than 5% of intangibles are disclosed in the table below. A
sensitivity analysis on the key assumptions in the impairment testing are disclosed in the table on the next page.
CONSOLIDATED FINANCIAL STATEMENTS 68
3.2 Impairment tests (continued)
Sensitivity analysis
(DKKm)
Carrying
amount
Avg.
Allowed
decrease
Avg.
Allowed
decrease
Rate
Allowed
decrease
Rate
Allowed
decrease
Net of
tax
Allowed
increase
Pre-
tax
2023
US & Canada 2,259 4.3 % >4.3 % 6.0 %
>6.0%
3.0 %
>3.0 % 6.0 % 3.5 % 10.9 % 7.1 % 14.1 %
UK & Ireland 1,807 3.0 % >3.0 % 5.4 %
>5.4%
2.5 % >2.5 % 6.0 % 4.9 % 10.4 % >10.4 % 13.7 %
Switzerland 1,668 1.9 % >1.9 % 7.8 %
>7.8% 2.0 % >2.0 % 7.8 % 7.7 % 6.9 % >6.9 % 8.1 %
Finland 1,656 2.6 % >2.6 % 6.2 %
>6.2% 2.5 % >2.5 % 6.2 % 3.2 % 8.6 % 4.4 % 10.4 %
Spain 1,356 4.5 % >4.5 % 6.4 % >6.4 % 2.5 % >2.5 % 6.5 % 4.5 % 9. % 8.2 % 11.4 %
Türkiye
2)
1,275 31.7 % 11.5 % 7.8 % 6.9 % 10.0 % 8.4 % 8.0 % 3.6 % 36.2 % 5.3 % 43.7 %
Australia & NZ 1,272 2.0 %
>2.0 % 7.5 % >7.5 % 3.0 % >3.0 % 7.5 % >7.5 % 9.7 % >9.7 % 13.2 %
2022
US & Canada 2,352
6.1 % >6.1 %
5.8 %
>5.8 % 3.0 % >3.0 % 6.0 % 2.7 % 10.7 % 4.8 % 13.9%
UK & Ireland 1,780
4.8 %
>4.8 % 5.1 %
>5.1 % 3.0 % >3.0 % 6.0 % 5.1 % 10.2 % >10.2 % 12.9%
Switzerland 1,571
2.3 % >2.3 % 7.5 % >7.5 % 2.0 %
>2.0 % 7.5 % 7.1 % 7.0 % >7.0 % 8.3%
Finland 1,653 1.9 % >1.9 % 6.2 % > 6.2 % 2.5 % >2.5 % 6.2 % 3.2 % 8.6 % 4.5 % 10.5%
Spain 1,006 4.4 % >4.4 % 6.3 % >6.3 % 2.5 % >2.5 % 6.5 % 4.2 % 9.0 %
7.3 % 11.5%
Türkiye 1,283 36.0 % 17.5 % 8.4 %
>8.4 % 10.0 % >10.0 % 8.0 % 5.4 %
21.9 %
10.7 % 27.3%
Australia & NZ 1,317 2.8 % >2.8 % 5.6 %
>5.6 %
2.5 % >2.5 % 5.6 % 3.7 % 9.9 %
9.8 % 14.1%
France
3)
936
1.8 %
1.8 % 0.2% 1.2 % 2.5 %
0.7% 5.0 % 0.4% 9.4 % 0.6%
11.4%
1)
Excluding allocated corporate costs.
2)
Discount rate applied in the terminal period was 20.5%
3)
In June 2023, goodwill in France was fully impaired and the entity was subsequently reclassified as held for sale and discontinued operations.
Discount
rate
The allowed change represents the percentage points by which the specific key assumption can change, all other things being
equal, before the CGU’s recoverable amount equals its carrying amount.
Growth
Margin
1)
Growth
Margin
1)
Forecasting period
Terminal period
CONSOLIDATED FINANCIAL STATEMENTS 69
3.2 Impairment tests (continued)
3.2.3 Cash-generating units (CGUs)
3.2.4 Determining value in use
Forecasting period
Terminal period
Corporate costs
Consistent with the Group's management and reporting structure, the lowest level of CGUs is the individual countries, as cash
inflows are generated largely independent of cash inflows in other ISS countries (the majority of our contract portfolio is locally
based with no cross-border activities). Accordingly, impairment tests are carried out per country, and intangibles (i.e. goodwill and
customer contracts) are allocated to these.
Management of certain countries has been combined to take advantage of similarities in terms of markets, shared customers and
cost synergies. In such exceptional cases, the countries are regarded as one CGU when performing the impairment test.
The recoverable amount of each CGU is calculated on the basis of its value in use using certain key assumptions per CGU, i.e.
revenue growth, operating margin and discount rate.
Cash flow projections for the individual CGUs are based on financial forecasts for the following year as approved by management.
More specifically, management has considered the expected impacts from the OneISS strategic priorities, especially around
continued key account focus, investments in technology and the global operating model. Where relevant, initiated restructurings
and other improvement initiatives, have also been taken into consideration when estimating the expected future performance
and cash flows. This includes the impacts of the strategic review announced in November 2023.
Management also assessed the impact from macroeconomic developments, which in 2023 primarily related to increased inflation
rates. During the year, the Group demonstrated its continued ability to manage and mitigate price increases in the supply chain,
including activating indexation mechanisms in the contract portfolio to pass on price increases to our customers.
Assumptions applied in the terminal period generally reflect management’s long-term expectations for the individual country.
Revenue growth reflects inflation and GDP growth and is determined based on input from external sources like IMF’s “World
Economic Outlook”. Operating margin reflects the expected normalised earnings level in the long term.
Assumptions applied in the short to medium term (forecasting period of five years) generally reflect management’s expectations
considering all relevant factors, including the Group’s strategic initiatives, local initiatives, past experience and external sources of
information, where possible and relevant. This also includes expected development in local markets in terms of competition,
inflation and growth.
Corporate costs for the services performed by the Group’s head office functions for the benefit of the CGUs are allocated to the
individual CGUs and taken into account in the calculation of the recoverable amount.
CONSOLIDATED FINANCIAL STATEMENTS 70
3.2 Impairment tests (continued)
Key
assumptions
1)
Revenue
growth
Operating
margin
Discount rates
(net of tax)
2)
For Türkiye a country specific risk premium of 9.0% is added (2022: 6.0%).
1)
The key assumptions applied are used for accounting purposes and should not be considered a forward-looking statement within the meaning
of the US Private Securities Litigation Act of 1995 and similar laws in other countries regarding expectations to the future development.
Description
Year 1
• Financial forecasts as approved by management
Forecasting period (year 2-5)
• Based on expected market development, including maturity and inflation
• Impact from local and Group initiatives are considered, including key account focus
Terminal period
• Long-term expectations based on external sources such as IMF “World Economic Outlook”, OECD, etc.
• Not exceeding expected long-term average for the country, including inflation
Year 1
• Financial forecasts as approved by management
Forecasting period (year 2-5)
• Impact from local and Group initiatives are considered, including key account focus and investments
in technology and the global operating model
• Restructurings, including the strategic review in Q4 2023, and local improvement initiatives are considered
Terminal period
• Reflects the expected normalised earnings level in the long term
• Risk-free interest rate based on 10-year government bonds (country-specific), except that for Türkiye
a normalised interest rate is applied in the terminal period
• Premium added to adjust for the inconsistency of applying government bonds with a short-term
maturity when discounting cash flows with infinite maturity
• Country specific estimation risk premium added (to reflect possible variations in amounts/timing
of the projected cash flows)
• Equity risk premium: 6.0% (2022: 6.0%)2)
• Debt/equity target ratio (market values): 25/75 (2022: 25/75)
CONSOLIDATED FINANCIAL STATEMENTS 71
3.3 Acquisitions
3.3.1 Acquisition impact
Grupo Fissa
Prior years adjustments
Net assets and cash flow impact
(DKKm)
Grupo
Fissa
Prior
year adj.
2023 2022
Customer contracts
136 - 136
161
Other non-current assets 90 (7) 83
48
Trade receivables 200 - 200
(3)
Other current assets 205 - 205 50
Non-current liabilities (90) 4 (86) (68)
Current liabilities (354) (1)
(355) (48)
Fair value of net assets
187 (4) 183 140
Goodwill
217
4 221
203
Consideration transferred 404 - 404
343
Cash in acquired business (9) - (9) (33)
Consideration transferred, net 395 - 395 310
Contingent and deferred consideration (22) - (22) 15
Acquisitions (cash flow) 373
- 373 325
3.3.2 Subsequent acquisitions
On 14 September 2023, ISS acquired 100% of the shares in Grupo Fissa in Spain. The acquisition strengthens our market position
in Spain and enables us to expand and develop our cleaning service offering to public sector customers, predominantly in
Southern Spain.
The acquisition adds annual revenue of approximately DKK 745 million and more than 6,000 employees (estimated based on
unaudited financial information). Since completion of the acquisition, Grupo Fissa contributed revenue of DKK 254 million to the
ISS Group.
The purchase consideration amounted to DKK 404 million of which DKK 22 million are contingent upon certain conditions being
fulfilled, mainly related to the recoverability of certain receivables.
Due to the short time between completion of the acquisition and finalisation of these consolidated financial statements, the Group
has not yet completed the acquisition accounting. Consequently, the fair value of certain assets and liabilities such as deferred
revenue and provisions has been determined provisionally based on management’s best estimates as the necessary analyses and
calculations could not be completed.
Prior year adjustments related to the acquisition of Livit FM Services AG in Switzerland in 2022.
The Group completed no acquisitions from 1 January to 15 February 2024.
Goodwill amounted to DKK 217 million and is attributable mainly to: 1) platform for growth primarily in Southern Spain, 2)
synergies and scale, 3) expertise and know-how in the Healthcare, Education and Public administration segment, and 4) assembled
workforce. Goodwill is deductible for tax purposes.
CONSOLIDATED FINANCIAL STATEMENTS 72
3.3 Acquisitions (continued)
3.3.3 Pro forma revenue and operating profit
Accounting policy
After initial recognition, goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment testing,
goodwill acquired in a business combination is allocated to each of the Group’s cash-generating units (CGUs) that are expected to
benefit from the combination.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate
of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests
in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree
at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as
incurred and presented in Other income and expenses, net.
If uncertainties exist at the acquisition date regarding identification or measurement of assets, liabilities and contingent liabilities,
initial recognition is based on provisionally determined fair values. Changes to fair values are adjusted against goodwill up until 12
months after the acquisition date. Comparatives are restated accordingly. Changes in fair values after 12 months are recognised in
Other income and expenses, net.
Goodwill is initially measured at cost being the excess of the consideration transferred over the net identifiable assets acquired
and liabilities assumed.
Assuming acquisitions/divestments in the year were included/excluded in profit or loss from 1 January 2023, revenue on a pro
forma basis would have been DKK 79,094 million compared to reported revenue of DKK 78,702 million. Likewise, operating profit
before other items on a pro forma basis would have been DKK 4,168 million compared to reported operating profit before other
items of DKK 4,150 million.
Pro forma revenue and operating profit before other items include adjustments relating to acquisitions/divestments estimated by
local ISS management at the time of acquisition/divestment or actual results where available. The estimates are based on
unaudited financial information.
Contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date.
CONSOLIDATED FINANCIAL STATEMENTS 73
3.4 Discontinued operations, assets held for sale and divestments
3.4.1 Discontinued operations
Profit or loss
(DKKm)
Note 2023 2022
Revenue 2,662
3,085
Expenses (2,808) (3,125)
Operating profit before other items (146)
(40)
Other income and expenses, net (501) 141
Royalty (61) (66)
Goodwill impairment
3.2 (937) -
Operating profit (1,645)
35
Financial income/(expenses), net (55)
(5)
Net profit before tax (1,700) 30
Income tax (25) (66)
Net profit from discontinued operations (1,725) (36)
2023: Includes Brunei and France.
2022: Includes Brunei, Portugal, Russia and Taiwan.
On 9 August 2023, ISS announced the intention to divest the French business, excluding global key account customers. As a
result, ISS France was classified as held for sale and discontinued operations as of that date.
In the second half of 2023, the sales process has been ongoing, and on 22 December 2023 ISS signed a binding agreement (put
option) to divest the business to Onet SA, a French facility services company. A mandatory information and consultation process
with the employee representative has been launched. Completion of the transaction is expected in first half of 2024 and is
subject to customary antitrust approval.
Historically, financial results in France have not been satisfactory and have been dilutive to Group operating margins and growth.
During the past several years, ISS has worked towards restructuring the business and establishing a solid foundation in the
French market. However, the efforts have not generated the expected financial improvements, among others due to inherent
strategic challenges, difficult market conditions, and continued muted commercial development.
At 30 June 2023, ISS concluded that building a long-term, sustainable business with a strengthened market position in France
would require further restructurings and significant investments, which led to recognition of an impairment loss of DKK 1,257
million (see 3.2, Impairment tests) and the subsequent decision to divest ISS France and reposition ISS in the French market to
only focus on servicing global key account customers.
ISS continuously reviews the strategic fit and rationale of its business activities. In 2023, this led to four minor non-core
businesses being divested in Spain and Singapore. Also, the exit from Brunei, where we signed an agreement to divest our
activities in 2022, was completed in February 2023.
CONSOLIDATED FINANCIAL STATEMENTS 74
3.4.1 Discontinued operations, assets held for sale and divestments (continued)
Impact on profit or loss
Cash flows
(DKKm)
2023 2022
Operating activities (44) (140)
Investing activities (2) (115)
Financing activities (41)
(45)
The initial classification of ISS France as held for sale and discontinued operations, did not result in impairment losses beyond
the impairment loss recognised at 30 June 2023 of DKK 1,257 million.
The total impairment losses and fair value adjustments in 2023 amounted to DKK 1,458 million as presented to the left in:
• Goodwill impairment (DKK 937 million); and
• Other income and expenses, net (DKK 521 million)
Subsequently, additional investment in non-monetary assets of DKK 64 million were immediately written off.
Finally, at 31 December 2023 fair value less costs to sell was reassessed on the basis of the agreement with Onet SA, which
resulted in recognition of an additional loss of DKK 137 million.
CONSOLIDATED FINANCIAL STATEMENTS 75
3.4 Discontinued operations, assets held for sale and divestments (continued)
3.4.2 Assets held for sale
Major classes
(DKKm)
2023
2022
Goodwill -
11
Other non-current assets 143 12
Current assets 555 9
Assets held for sale 698 32
Non-current liabilities 305 -
Current liabilities 1,044 10
Liabilities held for sale 1,349 10
Significant accounting estimates and judgements
The Group classifies non-current assets and disposal groups as held for sale when management assesses that their carrying
amounts will be recovered through a sale rather than continuing use within one year from the classification. Management’s
assessment is based on an evaluation of whether the sale is highly probable, and the asset or disposal group is available for
immediate sale in its current condition, including whether actions required to complete the sale indicate that it is unlikely that
significant changes to the sale will be made or that the decision to sell will be withdrawn. Management is committed to the plan to
sell the asset.
Management considers intangible assets relating to the disposal groups, taking into consideration how to separate the net assets
(including intangible assets) relating to the disposal group from the Group’s assets in the continuing business. Impairment of
these intangibles, both on initial classification as held for sale and subsequently, is considered. The estimation uncertainty relating
to impairment of intangibles is described in 3.2, Impairment tests.
If a sale has not been concluded within one year, the period is extended if management assesses that the above criteria continue
to be fulfilled.
On classification, management estimates the fair value (the sales price less expected costs to sell). Depending on the nature of the
non-current assets and the disposal group’s activity, assets and liabilities, the estimated fair value may be associated with
uncertainty and possibly adjusted subsequently. Measurement of the fair value of disposal groups is categorised as Level 3 in the
fair value hierarchy as measurement is not based on observable market data.
CONSOLIDATED FINANCIAL STATEMENTS 76
3.4 Discontinued operations, assets held for sale and divestments (continued)
Accounting policy
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling
interests and other components of equity, while any resultant gain or loss is recognised in Other income and expenses, net.
Divestments Gain or loss on disposal of an operation that is part of a CGU includes a portion of the related goodwill allocated to
that CGU. Goodwill related to the disposed operation is measured based on the fair value of the disposed operation relative to the
fair value of the entire CGU.
Assets held for sale comprise assets and liabilities related to disposal groups held for sale, and are measured at the lower of their
carrying amount and fair value less costs to sell. Once classified as held for sale, assets are not amortised or depreciated.
Impairment losses on initial classification as held for sale, and subsequent gains and losses on remeasurement are recognised in
profit or loss and disclosed in the notes.
A disposal group is presented as discontinued operations if it is a geographical area, i.e. a CGU (country), that either has been
disposed of, or is classified as held for sale.
Assets held for sale are presented in separate lines of the statement of financial position and specified in the notes. Comparatives
are not restated.
Discontinued operations are presented separately as Net profit from discontinued operations and specified in the notes.
Comparatives are restated.
Cash flows from discontinued operations are included in cash flow from operating, investing and financing activities together with
cash flows from continuing operations, but separately specified in 3.4.1, Discontinued operations.
CONSOLIDATED FINANCIAL STATEMENTS 77
3.4 Discontinued operations, assets held for sale and divestments (continued)
3.4.3 Divestment impact
Divestments completed in 2023
Company/activity Country
Service
type
Excluded
from P/L
Interest
Annual
revenue
(DKKm)
1)
Employees
(number)
1)
ISS Brunei Brunei Country exit February 100% 44 539
Security Business Spain Technical April 100% 51 181
Landscaping Singapore Technical July 100% 67
260
Sanitation Services Singapore Technical July 100% 23
26
Technical Services Spain Technical July 100% 51
82
Total
236
1,088
1)
Unaudited
Net assets and cash flow impact
(DKKm)
2023
2022
Goodwill 15 190
Other non-current assets 18
165
Current assets 59 325
Non-current liabilities -
(24)
Loans and borrowings
(5)
(24)
Current liabilities (27) (251)
Net assets disposed 60 381
Gain/(loss) on divestment, net
1)
(3) 168
Divestment costs 42 128
Consideration received 99 677
Cash in divested businesses (23)
(87)
Consideration received, net
76
590
Contingent and deferred consideration (4) 49
Divestment costs paid (47) (52)
Divestments (cash flow) 25 587
3.4.4 Subsequent divestments
No divestments were completed from 1 January to 15 February 2024.
1)
In addition, DKK 6 million (2022: DKK 36 million) was recognised in Other income and expenses, net
related to recycling of accumulated foreign exchange adjustments on country exits.
CONSOLIDATED FINANCIAL STATEMENTS 78
SECTION 4
Capital structure
4.1 Equity
4.1.1 Capital management
4.1.2 Share capital
4.1.3 Translation reserve
(DKKm)
Hedging Subsidiaries Total
2023
At 1 January (185) (412) (597)
Foreign exchange adjustments of subsidiaries (ISS Global A/S's share) - (290) (290)
Recycling of accumulated foreign exchange adj. on country exits - (6) (6)
Hyperinflation, Türkiye - 309 309
Fair value adjustment of net investment hedges, net of tax (84) - (84)
At 31 December (269)
(399) (668)
2022
At 1 January (152) (805) (957)
Foreign exchange adjustments of subsidiaries (ISS Global A/S's share) -
26 26
Recycling of accumulated foreign exchange adj. on country exits - (36) (36)
Hyperinflation, Türkiye - 403 403
Fair value adjustment of net investment hedges, net of tax (33) - (33)
At 31 December (185) (412) (597)
The Group monitors the capital structure and evaluates the need for adjustments on an ongoing basis. The Group's objectives for
managing capital and what is managed as capital are described in 4.5, Liquidity risk. The dividend policy and payment of dividend
is made subject to the necessary consolidation of equity and the Group's continuing expansion and profitability.
At 31 December 2023, ISS Global A/S’s share capital comprised a total of DKK 180,200 shares (2022: 180,200) with a nominal value
of DKK thousand each. All shares were fully paid and freely transferable.
The ISS Global Group is indirectly wholly owned by ISS A/S and is therefore part of the ISS A/S Group. Group Treasury manages
financing activities and capital structure centrally for the ISS A/S Group as a whole. The ISS Global Group's financing activities and
capital structure are not assessed independently of the ISS A/S Group.
ISS Global A/S has one class of shares, and no shares carry special rights. Each share gives the holder the right to one vote at our
general meetings.
ISS Global A/S (the Group's parent) is a holding company, and its primary assets are shares in subsidiaries, receivables from its
subsidiaries and cash in its bank accounts. ISS Global A/S has no revenue generating operations of its own, and therefore ISS
Global A/S’s cash flow and ability to service its indebtedness and other obligations will depend primarily on the operating
performance and financial condition of its operating subsidiaries, and the receipt by ISS Global A/S of funds from its subsidiaries in
form of dividends or otherwise.
CONSOLIDATED FINANCIAL STATEMENTS 79
4.1 Equity (continued)
Hedging reserve
4.1.4 Dividends
4.1.5 Non-controlling interests
Accounting policy
Translation reserve comprises foreign exchange differences arising from the translation of financial statements of foreign entities
with a functional currency other than DKK as well as from the translation of non-current balances which are considered part of the
investment in foreign entities. Furthermore, the reserve includes fair value adjustments of net investment hedges and
hyperinflation restatement. On full realisation of a foreign entity the accumulated foreign exchange adjustments are transferred to
profit or loss in the same line item as the gain or loss.
Retained earnings is the Group’s free reserves, which includes share premium. Share premium comprises amounts above the
nominal share capital paid by shareholders when shares are issued by ISS Global A/S.
In 2023, the Group ceased the use of currency swaps to hedge its currency exposure on net investments in subsidiaries. At 31
December 2023, accumulated fair value adjustments, net of tax amounted to DKK (269) million of which DKK (140) million related
to GBP, DKK (75) million related to CHF and DKK (54) million related to USD. The total tax effect was DKK 12 million. The amounts
will remain in the translation reserve until full realisation of the foreign entity.
In 2023 and 2022, no dividend to ISS World Services (ultimately ISS A/S) were approved.
The Group’s non-controlling interests predominantly relates to ISS Türkiye, where Actera, a leading Türkiyish private equity
company, owns 39.9%. Actera became minority shareholder of ISS Türkiye as part of the acquisition of Rönesans Facility
Management Company in September 2021. Further, certain members of management of ISS Türkiye together hold a minority
shareholding of 10% in ISS Türkiye.
The shareholders’ agreement between ISS, Actera and management establishes the rights and obligations of the parties, including
rights and restrictions on transferring shares, such as right of first refusal, drag along rights from Q4 2024 and right to explore a
potential Initial Public Offering (IPO).
CONSOLIDATED FINANCIAL STATEMENTS 80
4.1 Equity (continued)
(DKKm)
Note
Retained
earnings
Translation
reserve
Total
Non-
controlling
interest
Total
equity
2023
Defined benefit plans
Remeasurement (gain)/loss 7.1 (423) - (423) (39)
(462)
Asset ceiling 7.1 299 - 299 -
299
Foreign exchange adjustments
Foreign exchange adjustments of foreign entities
- (290) (290)
(148)
(438)
Recycling of accumulated foreign exchange adj. on country exits - (6) (6) - (6)
Hyperinflation restatement of equity at 1 January -
309 309 158 467
Hedging
Fair value adjustments of net investment hedges - (84) (84) - (84)
Tax
Tax related to the items above 23 - 23 10
33
Total (101) (71) (172) (19) (191)
2022
Defined benefit plans
Remeasurement (gain)/loss 7.1 253 - 253 (45)
208
Asset ceiling 7.1 (43)
- (43) -
(43)
Foreign exchange adjustments
Foreign exchange adjustments of foreign entities - 26 26 (57) (31)
Recycling of accumulated foreign exchange adj. on country exits - (36) (36) - (36)
Hyperinflation restatement of equity at 1 January - 403 403
411 814
Hedging
Fair value adjustments of net investment hedges
- (43) (43) -
(43)
Tax
Tax related to the items above (62) 10 (52) 9 (43)
Total 148 360 508 318 826
Development in 2023
Attributable to the owner of ISS
Global A/S
4.1.7 Other comprehensive income
In 2023, other comprehensive income was DKK (191) million, a decrease of DKK 1,017 million compared to 2022. The decrease
mainly related to an increased negative impact from translation of foreign entities primarily Türkiye, Switzerland and the UK as well
as remeasurement gain/losses on defined benefit plans partly offset by a positive impact from changes in asset ceiling. In addition,
the positive impact from hyperinflation restatement in Türkiye decreased by DKK 347 million compared to 2022.
CONSOLIDATED FINANCIAL STATEMENTS 81
4.2 Borrowings and interests
4.2.1 Loans and borrowings
(DKKm)
Note 2023 2022
Issued bonds 14,073 13,973
Lease liabilities 2,282 2,400
Bank loans 311 363
Debt to companies within the ISS Group 19 49
Loans and borrowings 16,685 16,785
Non-current liabilities 13,386 15,893
Current liabilities 3,299 892
Loans and borrowings 16,685 16,785
Cash and cash equivalents (6,093) (5,166)
Receivables from companies within the ISS Group (3,919) (3,523)
Derivatives, net 2.2, 2.3 46 80
Securities 2.2 (117) (104)
Net debt 6,602 8,072
Refinancing
Financing fees
Fair value
On 26 June 2023, ISS entered into a new senior unsecured Revolving Credit Facility of EUR 900 million with a syndicate of 12
banks. The facility matures in June 2028 with a two-year extension option and replaces the EUR 1 billion Revolving Credit Facility
maturing in 2024. The new Revolving Credit Facility is not subject to financial covenants and the margin is determined semi-
annually based on a margin grid.
At 31 December 2023, accumulated financing fees recognised in loans and borrowings amounted to DKK 54 million (2022: DKK 57
million). The decrease compared to last year was due to ordinary amortisation of DKK 29 million (2022: DKK 22 million) recognised
in financial expenses, partly offset by financing fees of DKK 26 million being capitalised in relation to the new Revolving Credit
Facility.
At 31 December 2023, the fair value of bonds was DKK 13,474 million (2022: DKK 15,751 million). The fair value of bonds was
based on the quoted market price on the Luxembourg Stock Exchange and measurement is categorised as Level 1 in the fair
value hierarchy.
For the remaining loans and borrowings, the fair values are not materially different from their carrying amounts due to their
short-
term nature.
Furthermore, EUR 300 million of EMTN bonds will mature in December 2024 and EUR 500 million will mature in July 2025. In the
first half of 2024, the Group will evaluate different refinancing options. Except for this, ISS has no material short-term debt
maturities.
CONSOLIDATED FINANCIAL STATEMENTS 82
4.2 Borrowings and interests (continued)
4.2.2 Financial income and expenses
(DKKm)
2023 2022
Interest income on cash and cash equivalents 98 67
Interest income to companies within the ISS Group
1)
212 92
Monetary gain on hyperinflation restatement 87 138
Financial income 397 297
Interest expenses on loans and borrowings
1)
(355) (299)
Interest expenses on lease liabilities
1)
(119) (77)
Interest expenses on factoring
1)
(71) (22)
Interest expenses to companies within the ISS Group
1)
(32)
(9)
Bank fees (61)
(48)
Amortisation of financing fees (non-cash)
1)
(29)
(22)
Net interest on defined benefit obligations
(24)
(17)
Commitment fees
(16) (43)
Foreign exchange losses (100) (73)
Financial expenses (807) (610)
1)
Measurement basis amortised cost.
Monetary gain on hyperinflation restatement related to the adjustment for hyperinflation (IAS 29) in Türkiye.
Interest expenses on loans and borrowings comprised mainly interest on issued bonds. The increase compared to 2022 was
driven by increased interest rates throughout 2023 of which DKK 43 million related to the interest rate swap on part of the bonds.
Interest expenses on factoring increased due to higher facility utilisation and increased interest rates throughout 2023.
Foreign exchange losses were mainly driven by the unhedged TRY and EUR positions. The highest contributor is TRY, which
remains unhedged due to high cost. TRY depreciated 39% against DKK in 2023.
CONSOLIDATED FINANCIAL STATEMENTS 83
4.2 Borrowings and interests (continued)
4.2.3 Cash flow impact from changes in loans and borrowings
(DKKm)
Note
Issued
bonds
Lease
liabilities
Bank
loans
Debt to
companies
within the
ISS Group
Total
2023
At 1 January 13,973 2,400 363 49 16,785
Foreign exchange adjustments 31 (16) (118) (1) (104)
Cash flows - (778) (144) (29) (951)
Acquisitions/divestments, net - (9) 207 -
198
Lease additions 2.6 - 906 -
-
906
Fair value adjustments 4.4 51 - -
-
51
Reclass to Liabilities held for sale
- (243) (11)
-
(254)
Other
18 22 14 - 54
At 31 December 14,073
2,282 311 19 16,685
2022
At 1 January 14,064 2,464 340 9 16,877
Foreign exchange adjustments - (13) (86) - (99)
Cash flows - (850) (41) 40 (851)
Acquisitions - 40 - -
40
Lease additions 2.6 - 761 - - 761
Fair value adjustments 4.4
(108) - 43 - (65)
Other 17 (2) 107
- 122
At 31 December 13,973 2,400 363
49
16,785
Accounting policy
Issued bonds and bank loans are recognised initially at fair value net of transaction costs (financing fees) and subsequently at
amortised cost. Any difference between the proceeds and the nominal value is recognised in Financial expenses over the term of
the loan using the effective interest method.
Lease liabilities At the commencement date the Group recognises lease liabilities at the present value of the lease payments to be
made over the lease term. The present value is calculated using the Group’s incremental borrowing rate if the interest rate implicit
in the lease is not readily determinable. Subsequently, the lease liability is measured at amortised cost and remeasured due to
modifications such as changes in; 1) lease term, 2) the assessment to purchase the underlying asset, 3) future lease payments
(e.g. a change in an index or rate), or 4) the Group’s estimate of the amount expected to be payable under a residual guarantee.
CONSOLIDATED FINANCIAL STATEMENTS 84
4.3 Financial risk management
Financial
risks
Risk Basis for assessment at 31 December Note
Credit risk Low
• Not past due on trade receivables is around 90% (aging analysis)
• Expected credit losses on trade receivables are less than 2% of gross receivables (credit ratings)
• The Group transacts only with financial institutions with a credit rating of at
least A- (cash and cash equivalents)
2.1
Interest rate
risk
Low
• 82% of the Group's bank loans and bonds carried fixed rates (2022: 82%)
• Duration of gross debt (fixed-rate period) 2.1 years (2022: 2.9)
4.4
Liquidity risk Low
• Diversified funding portfolio of debt (bonds and bank loans)
• No financial covenants in our main Group facilities (certain covenants apply to the
local loan facility in Türkiye)
• New revolving credit facility of EUR 900 million (established in 2023) maturing in 2028
• Uncommitted facilities in place to ensure flexible and efficient liquidity management
4.5
Currency
risk
Low
• The Group benefits from a natural hedge in having income, costs and investments in
the same functional currency, country-by-country
• 97.6% of the Group's loans and borrowings (external) denominated in EUR (2022: 97.2%)
4.6
The Group is exposed to a number of financial risks arising from its operating and financing activities, mainly interest rate risk,
liquidity risk, currency risk and credit risk. It is management’s assessment that the Group’s exposure to these risks is low. The
Group has not identified additional financial risk exposures in 2023 compared to 2022.
Financial risks are managed centrally by Group Treasury based on the Financial Policy, which is reviewed and approved annually
by the Board of Directors of ISS A/S. Exposure to credit risk on trade receivables and expected credit losses is however managed
locally in the operating entities, see 2.1, Trade receivables and credit risk. Through our risk management procedures, financial
risks are monitored and reduced to an acceptable level.
An overview of financial risks and impact assessment at 31 December 2023 is provided to the right. The Group’s objectives and
policies for measuring and managing risk exposure are explained in the respective notes.
On an ongoing basis the Group considers whether the financial risk management approach appropriately addresses the risk
exposures.
In 2023, the Group decided to cease the use of currency swaps to hedge its currency exposure on net investments in subsidiaries
in the UK (GBP), the US (USD) and Switzerland (CHF) as this was no longer considered beneficial, see 4.1.3, Translation reserve.
It is the Group’s policy to mitigate risk exposure derived from its business activities. Group policy does not allow taking speculative
positions in the financial markets.
CONSOLIDATED FINANCIAL STATEMENTS 85
4.4 Interest rate risk
– low exposure
4.4.1 Interest-bearing loans and borrowings
2023 2022
(DKKm)
Maturity
Nominal interest
rate
Nominal
value
Carrying
amount
Carrying
amount
Issued bonds (fixed interest rate)
EMTNs (EUR 300 million)
2024 2.13%
2,237 2,237 2,229
EMTNs (EUR 500 million)
1)
2025 1.25%
3,727 3,660 3,594
EMTNs (EUR 500 million) 2026 0.88% 3,727 3,713 3,700
EMTNs (EUR 600 million) 2027 1.50% 4,471 4,463 4,450
14,162 14,073
13,973
Bank loans (floating interest rate)
Loan facility Türkiye (TRY) 2026
TLREF
98 97
192
Bank loans and overdrafts (Multi) - - 235 214
171
333 311 363
Intra-Group (floating interest rate)
Debt to companies within the ISS Group 19 19 49
19 19 49
Interest rate sensitivity
• At least 50% of the Group’s bank loans and issued bonds must carry fixed interest rates directly or through derivatives
• Duration of gross debt (fixed-rate period) shall be 2-6 years
• The fixed/floating ratio and gross debt duration (fixed-rate period) are measured on a monthly basis
• Interest rate swaps (fair value hedge) are used to manage the fixed/floating ratio on gross debt
Mitigation
Low interest risk exposure
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial
instruments. Exposure relates to bank loans, bonds or interest rate swaps with floating interest rates.
Risk management policy
1)
The carrying amount included the accumulated fair value adjustments at
31 December 2023 of the hedged item, see 4.4.2 below.
An increase in relevant interest rates of 1%-point, with all other variables held constant, would have increased net profit by DKK 13
million (2022: increased by DKK 9 million).
The estimate was based on the Group’s floating rate loans and borrowings and receivable from companies within the ISS Group,
i.e. disregarding cash and cash equivalents, as the level at 31 December is typically the highest in the year and thus not
representative for the purpose of this analysis.
CONSOLIDATED FINANCIAL STATEMENTS 86
4.4 Interest rate risk (continued)
4.4.2 Fair value hedge
(DKKm)
Nominal
amount
Carrying
amount
Accumulated fair
value adj.
Change
in FV
Interest rate swap EUR 300 million (57) (57) 51
Bond (fixed-rate borrowing), maturing 2025 EUR 500 million 3,660 57 (51)
Accounting policy
The Group’s interest rate swap qualifies as fair value hedge as the risk being hedged is the possible change in the fair value of a
recognised liability. Thus, hedge accounting is applied.
Fair value measurement takes current market data into account. The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value. Measurement is categorised as Level 2 in the fair
value hierarchy as it is based on directly observable market data.
The change in the fair value of the interest rate swap (the hedging instrument) is recognised in profit or loss under Financial
income or Financial expenses. The change in the fair value of the hedged item (the bond) attributable to the risk being hedged is
recognised as part of the carrying amount of the hedged item and is also recognised in profit or loss under Financial income or
Financial expenses. As the hedge is effective there is no net impact on profit or loss.
The unamortised fair value is recognised in profit or loss if the hedged item is derecognised.
In 2023, no ineffectiveness was recognised in profit or loss (2022: no ineffectiveness).
The contractual maturity of the interest rate swap is illustrated in 4.5.1, Financial liabilities.
At 31 December 2023, the Group had an interest rate swap agreement with a nominal amount of EUR 300 million whereby the
Group receives a fixed rate interest and pays a variable interest rate on the nominal amount. The swap hedges the exposure to
changes in the fair value of the Group's fixed rate bond maturing in 2025.
CONSOLIDATED FINANCIAL STATEMENTS 87
4.5 Liquidity risk
Liquidity risk
– low exposure
4.5.1 Financial liabilities
Contractual maturities
(DKKm)
Carrying
amount
Contractual
cash flows
< 1
year
1-2
years
2-3
years
3-4
years
4-5
years
> 5
years
2023
Bonds and bank loans 14,384 14,998 2,725 3,905 3,852 4,516 -
-
Lease liabilities 2,282 2,519 1,002 551 370 232 127 237
Debt to companies within the ISS Group 19 20 20 - - -
- -
Trade payables and other
1)
6,380 6,380 6,380 - -
-
- -
Derivatives 70
70
70 - -
-
- -
Total financial liabilities
23,135 23,987
10,197
4,456
4,222 4,748 127
237
2022
Bonds and bank loans
14,336 15,333
539 2,513 3,914 3,861 4,506
-
Lease liabilities 2,400 2,533 752
564 423 259 168
367
Debt to companies within the ISS Group 49 51 51 - - - -
-
Trade payables and other
1)
5,055 5,055 5,055 - - - - -
Derivatives 130 130 130 - - -
- -
Total financial liabilities 21,970 23,102 6,527 3,077 4,337 4,120
4,674 367
1)
Including payable royalties, management fees to ISS World Services A/S and joint taxation contribution.
The risk implied from the values reflects the one-sided scenario of cash outflows only. Trade payables and other financial liabilities
are mainly used to finance operating assets such as trade receivables and property, plant and equipment.
Liquidity risk results from the Group’s potential inability or difficulty in meeting the contractual obligations associated with its
financial liabilities due to insufficient liquidity.
• Maintain an appropriate level of short- and long-term liquidity reserves (liquid funds and committed credit facilities)
• Maintain a smooth maturity profile in terms of different maturities
• Maintain access to diversified funding sources
• Raising capital is managed centrally by Group Treasury to ensure efficient liquidity management
• Group Treasury monitors the risk of insufficient liquidity on a daily basis
• Liquidity is transferred to/from ISS Global A/S, which operates as the Group’s internal bank
• For day-to-day liquidity management cash pools have been established in the majority of the local entities
Mitigation
Risk management policy
The contractual maturities of financial liabilities above are based on the undiscounted contractual cash flows, i.e. including interest
payments estimated based on market expectations at 31 December.
CONSOLIDATED FINANCIAL STATEMENTS 88
4.5 Liquidity risk (continued)
- Nominal values
4.5.2 Liquidity reserves
(DKKm) 2023 2022
Cash and cash equivalents 6,093 5,166
Restricted cash (46) (35)
Unused revolving credit facilities 6,708 7,276
12,755 12,407
Not readily available
(686)
(1,078)
Readily available liquidity 12,069
11,329
Unused revolving credit facilities The Group has a EUR 900 million revolving credit facility maturing in June 2028 with a two years
extension option. In addition, uncommitted credit facilities are available in countries and at Group level, which are not considered
part of the readily available liquidity. At 31 December 2023, these amounted to DKK 3.9 billion of which DKK 0.1 billion was drawn
(2022: DKK 0.9 billion of which DKK 0.2 billion was drawn).
Not readily available Cash is considered readily available when upstreaming to the parent company (ISS A/S) is possible within five
days. In a number of countries, transfer to ISS A/S is assessed to take more than five days due to local administrative processes,
and thus such cash is not deemed readily available.
Liquidity reserves
The maturity profile of the Group’s current financing, i.e. issued
bonds, bank loans and committed bank facilities (excluding
interest payments) is illustrated in the chart to the right.
Maturity profile
Cash and cash equivalents reflects the strong liquidity position of the Group. The level is typically highest at 31 December and not
a representative level for the rest of the year.
Restricted cash DKK 46 million of the total cash and cash equivalents at 31 December 2023 was placed on blocked or restricted
bank accounts due to legal cases and tax-related circumstances.
CONSOLIDATED FINANCIAL STATEMENTS 89
4.6 Currency risk
– low
Risk management policy
4.6.1 Currency exposure, loans and borrowings
(DKKm)
Currency
exposure
(nominal)
Currency
swaps
(contractual)
Exposure,
net
Increase
in FX
Profit
or loss
Comprehensive
income
2023
EUR/DKK (15,320) 8,104
(7,216) 1% (72) (72)
TRY/DKK
1)
194 67
261 30% 62 78
USD/DKK 972 (1,132)
(160) 10% (16) (16)
Other/DKK (1,780) 2,070 290
10% 29
29
Total (15,934) 9,109 (6,825)
2022
EUR/DKK (17,661) 7,333 (10,328) 1% (103) (103)
USD/DKK 1,349 (1,491)
(142) 10% (14) (14)
Other/DKK (1,991) 1,690
(301) 10%
(30) (30)
Total (18,303) 7,532
(10,771)
1)
TRY is not hedged due to high costs of hedging.
Foreign currency sensitivity
Currency risk
Mitigation
The Group's exposure to currency risk on transaction level is low since income, costs and investments are in the same functional
currency country-by-country. Currency risk therefore predominantly arises from funding and investments in subsidiaries.
A change in relevant currencies, with all other variables held constant, would have impacted profit or loss and other
comprehensive income with the amounts above. The analysis is based on the Group’s internal monitoring of currency exposure on
loans and borrowings, intercompany loans, external long-term receivables as well as cash and cash equivalents.
• It is Group policy to pool funding activities centrally and fund investments in subsidiaries through a combination of intercompany
loans and equity
• Currency risk on intercompany loans is generally hedged against DKK or EUR when exposure exceeds DKK 5 million. Some
currencies cannot be hedged within a reasonable price range why correlation to a proxy currency is considered and, if deemed
appropriate, proxy hedging is applied
• Exposure to EUR is monitored but not hedged due to the fixed rate exchange policy between DKK/EUR
• Currency risk on net investments are as a main policy not hedged
• Currency swaps are used to hedge currency risk on loans and borrowings (external), intercompany balances and long-term
receivables (external)
• Currency exposure on loans and borrowings, intercompany balances and cash and cash equivalents is measured at least on a
weekly basis
Currency risk arises from changes in exchange rates, and affects the Group’s result, investments or value of financial instruments.
Sensitivity
The impact on profit or loss related to a change in TRY is adjusted for the translation effect related to receivables considered part
of the net investment in Türkiye.
CONSOLIDATED FINANCIAL STATEMENTS 90
4.6 Currency risk (continued)
4.6.2 Translation risk
Impact on profit or loss
2022-2023
2021-2022
TRY (30.7)% (40.8)%
GBP (1.8%)
0.8%
USD (2.7)%
12.6%
CHF
3.4%
7.7%
AUD
(6.7%) 3.9%
NOK (11.4%) 0.7%
SEK (7.2)% (4.5)%
HKD (2.7)% 11.7%
EUR 0.2% 0.0%
( ) = Weakened against DKK
Foreign currency sensitivity
(DKKm)
Revenue
Operating
profit before
other items
Royalty
expense
TRY 1,450 88 22
GBP 1,004
38 18
USD 672
27 11
CHF 638 51 13
AUD 485 36 10
NOK 381 32 8
SEK 304 18 6
HKD 250 15 5
EUR 229
12 5
Other 1,065 36
23
Total 6,478 353 121
A 10% change (TRY: 30% and EUR: 1% change) in relevant currencies, with all other variables held constant, would have impacted
profit or loss with the amounts below.
Excluding hyperinflation impact in Türkiye, changes in average exchange rates resulted in a decrease in Group revenue of DKK
2,320 million or 3.1% (2022: increase of DKK 688 million or 1.0%) and a decrease of the Group’s operating profit before other items
of DKK 157 million or 4.1% (2022: decrease of DKK 16 million or 0.5%).
Change in average FX rates
In 2023, changes in average FX rates resulted in a decrease in Group revenue of DKK 2,476 million or 3.4% (2022: increase of DKK
843 million or 1.2%) and a decrease of the Group’s operating profit before other items of DKK 175 million or 4.6% (2022: decrease
of DKK 45 million or 1.5%), including the impact of hyperinflation in Türkiye.
CONSOLIDATED FINANCIAL STATEMENTS 91
SECTION 5
Tax
5.1 Income tax
5.1.1 Tax in profit or loss
(DKKm) 2023 2022
Current tax 450 443
Deferred tax 14
(158)
Prior year adjustments, net (9)
13
Income tax 455
298
5.1.2 Effective tax rate
2023 2022
Statutory income tax rate, Denmark 22.0 % 22.0 %
Foreign tax rate differential, net 0.0 % (0.4)%
Total 22.0% 21.6 %
Non-tax-deductible expenses less non-taxable income
(0.3)%
(2.3)%
Prior year adjustments, net (0.4)% 0.6 %
Change in valuation of tax assets, net (4.8)% (5.6)%
Changes in tax rates 0.4 % 0.4 %
Hyperinflation 1.1 % (1.7)%
Other taxes 0.4 % 0.0 %
Effective tax rate
18.4% 13.0%
Development in 2023
Non-tax-deductible expenses less non-taxable income comprised various income and expenses. In 2023, the net non-taxable
income comprised mainly inflation adjustments in Chile and Mexico and non taxable interest income. In 2022, non-taxable
divestment gains in Hong Kong and the UK impacted positively, partly offset by the recurring negative impacts from interest
limitation in Denmark.
Compared to the statutory income tax in Denmark of 22%, the effective tax rate was mainly positively impacted by release of
valuation allowance on deferred tax assets in Germany and the Netherlands, whereas hyperinflation restatement in Türkiye
impacted negatively.
In 2023, the Group’s effective tax rate increased to 18.4% (2022: 13.0%), mainly driven by non-recurring non-taxable gains on
divestments in 2022 and the impact from hyperinflation restatement in Türkiye.
In 2023, income tax was DKK 455 million (2022: DKK 298 million). The increase was mainly driven by changes in deferred tax which
due to a lower amount of temporary differences as well as utilisation of deferred tax losses resulted in a tax expense of DKK 14
million (2022: tax income of DKK 158 million from recognition of additional deferred tax assets on tax losses).
CONSOLIDATED FINANCIAL STATEMENTS 92
5.1 Income tax (continued)
Country effective tax rate
Countries
Statutory
income tax
2023
2022
Australia 30.0 % 29.9 % 30.3%
Denmark (incl. HQ) 22.0 % 45.3 % 303.5 %
Finland 20.0 % 28.2 % 24.5%
Germany 30.3 % 102.3 % 40.4%
Norway 22.0% 22.0% 20.2%
Spain 25.0 % 26.8 % (18.9%)
Switzerland 18.0 % 17.9 % 18.1%
Türkiye 25.0 % 37.4 % (6.1%)
UK 23.5 % 7.5 % 17.1%
US 21.0 % 36.2 % (104.2%)
Change in valuation of tax assets, net related mainly to release of valuation allowance on tax losses in Germany and the
Netherlands due to expected improvements in future profitability (2022: Spain, the Netherlands and Germany).
Hyperinflation related to the hyperinflation adjustment in Türkiye, including the positive impact from change in local tax rules
leading to step-up in tax bases of assets due to hyperinflation.
Changes in tax rates was mainly driven by the US due to difference in federal tax rate (21%) and the tax rate applied for deferred
taxes, including state taxes (24%). In 2022, the change was mainly driven by changed income tax rates in Türkiye from 20% to 25%
(effective from 2023) and in the UK from 19% to 25% (effective from April 2023).
Other taxes mainly comprised withholding tax, e.g. in Denmark.
The effective tax rate (ETR) for our largest countries is disclosed below. The country ETR may deviate from the statutory income tax
rate due to e.g. effects from change in valuation of deferred tax assets, non-taxable gains on divestments, withholding taxes
without credit exemption or from prior year adjustments.
CONSOLIDATED FINANCIAL STATEMENTS 93
5.2 Deferred tax
(DKKm) 2023 2022
2023
2022
Tax losses carried forward
561 482
-
-
Goodwill 4
4 423 387
Customer contracts 7
7 187 150
Property, plant and equipment 116 187 471 425
Provisions and other liabilities 918 973 287 394
Pensions 157 126 82 62
Set-off within legal tax units and jurisdictions (847) (882) (847) (882)
Total 916 897 603 536
Development in deferred tax
(DKKm)
2023
2022
Deferred tax liabilities, net at 1 January
(361)
(412)
Prior year adjustments, net 26 34
Foreign exchange adjustments 26 (22)
Hyperinflation restatement (4) 62
Acquisitions and divestments, net (2) 20
Other comprehensive income (33) 53
Reclass to Assets/(Liabilities) held for sale 21 24
Tax on profit before tax
14
(120)
Deferred tax liabilities, net at 31 December (313) (361)
5.2.2 Unrecognised deferred tax assets
5.2.3 Uncertain tax positions
Prior year adjustments, net mainly related to adjustment of tax deductions (temporary differences) in the final tax returns.
Acquisitions and divestments, net in 2023 related to the acquisition of Grupo Fissa in Spain (2022: Livit FM Services AG in
Switzerland).
Other comprehensive income comprised tax on actuarial (gains)/losses on pensions.
The decrease was mainly due to France being classified as held for sale and discontinued operations in 2023. Unrecognised tax
losses can be carried forward indefinitely in the individual countries, except for China, where tax losses can be carried forward for
5 years.
5.2.1 Recognised deferred tax
At 31 December 2023, the Group had unrecognised deferred tax assets which comprised tax losses carried forward and other
deductible temporary differences of DKK 1,032 million (2022: DKK 1,814 million) mainly related to Germany.
Uncertain tax positions include ongoing disputes with tax authorities in certain jurisdictions and have been provided for in
accordance with the accounting policies. Management believes that the provisions made are adequate. However, the actual
obligations may deviate as they depend on the result of litigations and settlements with the relevant tax authorities. The final
outcome of some of the ongoing disputes is expected to be determined in 2024-2025.
Assets
Liabilities
CONSOLIDATED FINANCIAL STATEMENTS 94
5.2 Deferred tax (continued)
Significant accounting estimates and judgements
Accounting policy
Deferred tax is provided using the liability method on temporary differences between tax bases of assets and liabilities and their
carrying amounts, except for goodwill which is not deductible for tax purposes. Where alternative taxation rules can be applied to
determine the tax base, deferred tax is measured according to management’s intended use of the asset or settlement of the
liability.
The Group has applied the mandatory exception for recognition and disclosure of deferred tax assets and liabilities arising from
Pillar Two Income taxes.
Deferred tax is measured according to the taxation rules and tax rates in the respective countries applicable at the reporting date
when the deferred tax becomes current tax.
Deferred tax assets, including the tax base of tax loss carryforwards, are recognised in non-current assets at the expected value of
their utilisation, either as a set-off against tax on future income, or as a set-off against deferred tax liabilities in the same legal tax
entity and jurisdiction.
Deferred tax assets relating to tax losses carried forward are recognised, when management assesses that these can be offset
against positive taxable income in the foreseeable future. The assessment is made at the reporting date taking into account the
impact from limitation in interest deductibility and local tax restrictions in utilisation of tax losses. Future taxable income is based
on financial forecasts approved by management and expectations for operational development, mainly in terms of organic growth
and operating margin, i.e. the cash flow projections made for the purpose of the Group’s impairment tests, see 3.2, Impairment
tests. These represent management’s best estimates, but are by nature associated with significant uncertainty.
Uncertain tax positions As part of operating a global business, disputes with tax authorities around the world may occur.
Management periodically evaluates positions taken in tax returns with respect to situations where applicable tax regulation is
subject to interpretation and considers whether it is probable that a tax authority will accept an uncertain tax treatment. The
possible outcome of uncertain tax positions is measured based on management’s best estimate of the amount required to settle
the obligation and recognised in deferred tax or income tax depending on the tax position.
CONSOLIDATED FINANCIAL STATEMENTS 95
SECTION 6
Remuneration
6.1 Management remuneration
(DKK thousand)
Board EGMB
Corporate
Senior
Officers
2023
Base salary and non-monetary benefits 9,176 13,484 50,671
Pensions 386 3,916
Annual bonus (STIP) - 7,176 15,709
Sign-on bonus - 11,658
Share-based payments
1)
- (4,603) 18,664
Severance payments -
- 16,161
Total remuneration 9,176
16,443
116,779
2022
Base salary and non-monetary benefits 8,587 15,123 49,935
Pensions 146 1,916
Annual bonus (STIP) - 11,572 30,101
Sign-on bonus -
- 2,066
Share-based payments -
7,310 14,741
Total remuneration 8,587
34,151 98,759
Remuneration policy is described in the Remuneration report which is available at:
https://brand.issworld.com/m/c534b1411e5287b/original/Remuneration-Policy-2023.pdf
1)
In 2023, share-based payments to the EGMB included a cost reversal of DKK 7 million (2022: DKK 0 million) due to forfeited PSUs as the
Group CEO Jacob Aarup-Andersen left ISS.
The management team of the ISS Global Group formally consists of the Executive Management and the Board of Directors of ISS
Global A/S. Members of the management team are not separately remunerated for their duties performed in the ISS Global
Group. Total remuneration to the members of the management team of ISS Global A/S for their respective duties performed for
the ISS A/S Group in 2023 to DKK 50.1 million (2022: DKK 60.1 million).
EGM
On 1 September 2023, Jacob Aarup-Andersen stepped down as Group CEO and was succeeded by former Group CFO Kasper
Fangel. A search process for a new Group CFO was initiated. In the period until 31 December 2023, the EGMB comprised only one
member, the Group CEO. As a result, total remuneration to the EGMB decreased compared to 2022.
As the ISS Global Group has no significant operating activities independently of the ISS A/S Group, it relies on the management
team of the ISS A/S Group who has authority and responsibility for planning, implementing and controlling the ISS Global Group’s
activities. Consequently, key management personnel of the ISS A/S Group is also considered key management personnel of the
ISS Global Group.
Remuneration to key management personnel of the ISS A/S Group is specified below:
CONSOLIDATED FINANCIAL STATEMENTS 96
6.2 Share-based payments
6.2.1 Long-term incentive programme
Fair value and profit or loss impact
LTIP 2020
1)
LTIP 2021 LTIP 2022 LTIP 2023
Fair value (DKKm)
At grant date 102
116 129 116
At 31 December 2023 - 83 98
102
Profit or loss impact (DKKm)
Recognised in 2023 3 17 27
23
Not yet recognised - 4 34 65
PSUs and participants (number)
Participants 109 122 142
151
PSUs granted 1,461,173 1,362,540 1,428,890
994,916
PSUs expected to vest, % 32% 64% 68% 62%
1)
Vested in March 2023.
Fair value assumptions
LTIP 2020 LTIP 2021 LTIP 2022 LTIP 2023
At the time of grant
Share price, DKK
1)
98 111-153 117-153 122-153
Expected volatility
2)
29.1% 47.2% 47.5% 44.2%
Expected life of grant, years 3
3 3
3
Risk-free interest rate
2)
(0.4)%-1.9% (0.6)%-0.9% (0.1%)-1.5% 1.0%-3.1%
1)
Based on five-day average.
2)
Based on observable market data for peer groups.
To drive delivery of long-term financial results, retention of leaders and alignment to shareholder value creation, the Group has
implemented two share-based incentive programmes:
• long-term incentive programme (LTIP)
• special incentive programme (SIP)
Subject to certain criteria, the PSUs will vest after three years.
Members of the EGM and other senior officers of the Group are granted a number of performance share units (PSUs) under the
annual LTIP. Participants are compensated for any dividend distributed between time of grant and time of vesting. Upon vesting,
each PSU entitles the holder to receive one share at no cost.
In 2023, the ISS A/S Group recognised share-based payment costs of DKK 72 million (2022: DKK 80 million) of which DKK (5)
million (2022: DKK 9 million) were recognised in ISS A/S and DKK 34 million (2022: DKK 29 million) were recognised in ISS World
Services A/S (see overview below for PSUs and overview in 6.2.2, Special incentive programmes (SIP) for RSUs).
CONSOLIDATED FINANCIAL STATEMENTS 97
6.2 Share-based payments (continued)
Vesting criteria
Vested programmes
Furthermore, in March 2024, the PSUs granted under LTIP 2021 will vest with 64% based on the annual EPS and TSR
performances for 2021, 2022 and 2023.
In March 2023, the LTIP 2020 programme vested. Based on the annual EPS and TSR performances for 2020, 2021 and 2022, 32%
of the granted PSUs vested at a weighted average price of DKK 152 at the date of exercise. After this vesting, no further PSUs are
outstanding under the LTIP 2020 and the programme has lapsed.
The vesting criteria are total shareholder return (TSR), measured relative to peer group performance, and earnings per share
(EPS).
• TSR: 40%
• EPS: 40%
• Service-based objective: 20%
For LTIP 2020, TSR and EPS were equally weighted (no service-based objective).
For LTIP 2021, LTIP 2022 and LTIP 2023 the weight of the individual criteria are:
CONSOLIDATED FINANCIAL STATEMENTS 98
6.2 Share-based payments (continued)
Outstanding PSUs
LTIP 2020 (vested in 2023) EGMB
Corporate
Senior
Officers
Other
senior
officers
Total
Outstanding at 1 January 2022 59,769 177,999 1,025,210
1,262,978
Forfeited - - (31,586)
(31,586)
Transferred
- (10,382) 10,382
-
Outstanding at 31 December 2022 59,769
167,617
1,004,006 1,231,392
Transferred - (25,773) 25,773 -
Exercised (19,397) (46,033) (334,169) (399,599)
Expired (40,372) (95,811) (695,610) (831,793)
Outstanding at 31 December 2023 - - - -
LTIP 2021 (vesting in 2024)
Outstanding at 1 January 2022 148,297 176,746 772,721 1,097,764
Granted - 11,015 64,856 75,871
Forfeited - (8,583) (71,403) (79,986)
Transferred -
6,578 (6,578) -
Outstanding at 31 December 2022 148,297
185,756 759,596 1,093,649
Granted 451 18,857 26,414 45,722
Forfeited (118,308) - (50,695) (169,003)
Transferred - (57,053) 57,053
-
Outstanding at 31 December 2023 30,440 147,560 792,368
970,368
LTIP 2022 (vesting in 2025)
Granted 139,713
265,208 948,934 1,353,855
Forfeited - (18,233) (115,516) (133,749)
Transferred - (9,116) 9,116
-
Outstanding at 31 December 2022 139,713 237,859 842,534
1,220,106
Granted 516 17,149 57,460
75,125
Forfeited (105,396) (6,085) (102,561)
(214,042)
Transferred
- (58,320) 58,320
-
Outstanding at 31 December 2023 34,833 190,603 855,753 1,081,189
LTIP 2023 (vesting in 2026)
Granted 47,698 191,237 755,981 994,916
Forfeited - (17,357) (100,948) (118,305)
Transferred -
(30,068) 30,068 -
Outstanding at 31 December 2023 47,698 143,812 685,101 876,611
EGM
CONSOLIDATED FINANCIAL STATEMENTS 99
6.2 Share-based payments (continued)
6.2.2 Special incentive programmes (SIP)
Fair value and profit or loss impact
SIP 2023
Fair value (DKKm)
At grant date 24 1
At 31 December 2023 - 1
Profit or loss impact (DKKm)
Recognised in 2023 2 0
Not yet recognised -
1
RSUs and participants (number)
Participants
37
4
RSUs granted 232,730 10,178
Expected to vest, % 100% 100%
Fair value assumptions
SIP 2023
At the time of grant
Share price, DKK 101 122
Expected life of grant, years 3 1.5
Vested programmes
In September 2023, a total of 10,178 RSUs were granted to certain Other Senior Officers under the SIP 2023 programme.
In March 2025, the RSUs granted under the SIP 2023 programme will vest 100% subject to achievement of individual service
criteria.
In March 2023, the SIP 2020-2023 programme vested. Based on individual service criteria, 100% of the granted RSUs vested at a
weighted average price of DKK 152 at the date of exercise. After this vesting, no further RSUs are outstanding under the SIP 2020-
2023 and the programme has lapsed.
The Group has a Special Incentive Programme (SIP) under which Restricted Share Units (RSUs) are granted to certain Corporate
Senior Officers (EGM members) and other senior officers of the Group. Subject to individual service criteria, the RSUs will vest
after two or three years. Upon vesting, each RSU entitles the holder to receive one share at no cost.
SIP 2020-2023
SIP 2020-2023
CONSOLIDATED FINANCIAL STATEMENTS 100
6.2 Share-based payments (continued)
Outstanding RSUs EGM
SIP 2020-2023
(vested in 2023)
Corporate
Senior
Officers
Other
senior
officers
Total
Outstanding at 1 January 2022 26,619 193,258
219,877
Granted
-
5,759
5,759
Forfeited -
(1,462) (1,462)
Transferred 10,432 (10,432) -
Outstanding at 31 December 2022 37,051 187,123 224,174
Exercised (37,051) (187,123) (224,174)
Outstanding at 31 December 2023 - - -
SIP 2023 (vesting in 2025)
Granted - 10,178 10,178
Outstanding at 31 December 2023 - 10,178 10,178
Accounting policy
The value of services received in exchange for granted performance-based share units (PSUs) and restricted share units (RSUs)
are measured at fair value at the grant date and recognised in employee costs over the vesting period with a corresponding
increase in debt to ISS A/S.
The fair value of granted PSUs under the long-term incentive programme is measured using a generally accepted valuation
model taking into consideration the terms and conditions upon which the PSUs were granted including market-based vesting
conditions (Total Shareholder Return (TSR)).
On initial recognition, an estimate is made of the number of PSUs and RSUs expected to vest. The estimated number is
subsequently revised for changes in the number of PSUs and RSUs expected to vest due to non-market based vesting conditions.
CONSOLIDATED FINANCIAL STATEMENTS 101
SECTION 7
Other required disclosures
7.1 Pensions and similar obligations
7.1.1 Pension schemes
The Group has a significant number of pension schemes with different characteristics. The majority of the schemes are defined
contribution plans, but in a number of countries, the Group is also party to defined benefit plans.
Defined contribution plans
These are pension schemes where contributions are paid to publicly or privately administered pension plans. The Group has no
further payment obligations once the contributions have been paid.
In 2023, contributions amounted to DKK 1,156 million (2022: DKK 1,217 million), or 83% of the Group’s pension costs (2022: 84%).
Defined benefit plans
Under these schemes the obligation towards the employees as well as the risk associated with future developments in salary,
interest rate, inflation, mortality, etc. rests with the Group. The plans are primarily based on years of service, and benefits are
determined on the basis of salary and position.
The largest plans are in Switzerland and the UK accounting for 87% (2022: 86%) of the Group’s obligation (gross) and 98% (2022:
97%) of its plan assets.
The majority of the obligations are funded with assets placed in independent pension funds. In some countries, primarily Sweden,
France, Türkiye, Hong Kong and Mexico, the obligation is unfunded. For unfunded plans, the obligation amounted to DKK 665
million or 8% of the present value of the total gross obligation (2022: DKK 633 million or 8%).
Multiemployer pension plans
In a few countries, the Group participates in multiemployer pension schemes that by nature are defined benefit plans. Some funds
are not able to provide the necessary information in order for the Group to account for the schemes as defined benefit plans and
these schemes are therefore accounted for as defined contribution plans.
7.1.2 Major defined benefit plans
Switzerland
Participants are insured against the financial consequences of:
• retirement;
• disability; and
• death
The pension plans guarantee a minimum interest credit and fixed conversion rates at retirement and include a risk-sharing
element between ISS and the plan participants.
Contributions are paid by both ISS and the employees and the plans must be fully funded. In case of underfunding, recovery
measures must be taken, such as additional financing from ISS or from ISS and the employees, reduction of benefits or a
combination of both.
The UK
Participants are insured against the financial consequences of:
• retirement; and
• death
The pension plans guarantee a defined benefit pension at retirement on a final salary basis, but do not provide any insured
disability benefits. The majority of the plans does not include a risk-sharing element between ISS and the plan participants.
CONSOLIDATED FINANCIAL STATEMENTS 102
7.1 Pensions and similar obligations (continued)
7.1.3 Defined benefit plans (carrying amounts)
(DKKm)
Present
value of
obligation
Fair value
of plan
assets
Carrying
amount
Present
value of
obligation
Fair value
of plan
assets
Carrying
amount
At 1 January 7,953 8,663 (710) 8,625
8,997
(372)
Current service costs
199 - 199
197
-
197
Interest on obligation/plan assets 257
233
24 72 55 17
Past service costs 18
-
18 11 - 11
Recognised in profit or loss 474
233
241 280 55 225
Remeasurement (gain)/loss:
Demographic assumptions (7)
- (7) 7 - 7
Financial assumptions 399 - 399 (1,702) - (1,702)
Experience adjustments 90 - 90 490 - 490
Return on plan assets - 20 (20) - (997) 997
Asset ceiling - 299 (299) - (43) 43
Recognised in other comprehensive income 482 319 163 (1,205) (1,040) (165)
Foreign exchange adjustments 328 501 (173) 214
295 (81)
Acquisitions and divestments, net - - - 227
219 8
Employee contributions 173
173 - 154
154 -
Employer contributions
-
260
(260) - 207
(207)
Benefits paid (605) (512)
(93) (342) (267)
(75)
Asset ceiling - (299) 299 - 43 (43)
Reclass to Liabilities held for sale (50) - (50) - - -
Other changes (154) 123 (277) 253
651 (398)
At 31 December 8,755
9,338 (583) 7,953
8,663 (710)
Recognised in the statement of financial position
(DKKm) 2023 2022
Carrying amount of defined benefit plans (583) (710)
Accumulated impact from asset ceiling
1)
1,172 1,352
Defined benefit obligation, net
2)
589 642
Other long-term employee benefits 546 543
Pensions and similar obligations 1,135 1,185
1)
Including a foreign exchange adjustment on the opening balance of DKK 119 million (2022: DKK 56 million).
2)
Including an asset of DKK 326 million (2022: DKK 247 million) related to defined benefit plans in the UK.
2023
2022
CONSOLIDATED FINANCIAL STATEMENTS 103
7.1 Pensions and similar obligations (continued)
Development in 2023
Contributions in 2023
Significant accounting estimates
Actuarial calculations and valuations are performed annually for all major plans. The present value of defined benefit obligations
is determined based on assumptions about the future development in variables such as salary levels, interest rates, inflation and
mortality. Applied assumptions vary from country to country due to local conditions. All assumptions are assessed at the
reporting date.
The discount rates used for calculating the present value of expected future cash flows are based on the market yield of high-
quality corporate bonds or government bonds with a maturity approximating to the terms of the defined benefit obligations.
In 2023, actuarial calculations led to recognition of actuarial losses due to decreased discount rates (financial assumptions) of
DKK 399 million, mainly in Switzerland. This was partly offset by a positive return on plan assets of DKK 20 million and a decrease
in the asset ceiling of DKK 299 million, primarily related to Switzerland and the UK. The net impact on the pension obligation from
actuarial calculations was a loss of DKK 163 million recognised in other comprehensive income.
In recent years, we have experienced strong asset returns and actuarial gains, which led to a significant surplus on the major
plans in Switzerland and the UK. Due to surplus restrictions (ISS does not have access to the overfunding), a significant asset
ceiling has been recognised in prior years.
In 2023, the Group contributed DKK 353 million to defined benefit plans (2022: DKK 283 million). The Group expects to
contribute DKK 352 million in 2024.
When the Group participates in multi-employer pension plans being accounted for as defined contribution plans due to
unavailability of information, there is a risk that the plans are not sufficiently funded. However, information on surplus or deficit in
the schemes is not available.
In 2023, market conditions for our plan assets including listed shares, bonds, and real estate improved compared to 2022,
resulting in a gain on plan assets in Switzerland and the UK. Due to a larger increase in the pension obligation (gross) the asset
ceiling decreased by DKK 299 million. As such, by the end of 2023, the accumulated impact from the asset ceiling was DKK 1,172
million (2022: DKK 1,352 million).
Accounting policy
The aggregated value of unfunded plans is presented as a net liability and the aggregated value of funded plans are presented
as a net asset.
Other long-term employee benefits are calculated as defined pension plans, except that actuarial gains and losses are
recognised in Employee costs. Other long-term employee benefits comprise jubilee benefits, long-service or sabbatical leave, etc.
Contributions to defined contribution plans are recognised in Employee costs when the related service is provided.
Defined benefit plans The Group’s net obligation is calculated by a qualified actuary using the projected unit credit method,
separately for each plan by estimating the amount of future benefits that employees have earned in return for their service in the
current and prior periods. The present value less the fair value of plan assets is recognised in Pensions and similar obligations.
When the calculation results in a potential asset, recognition is limited to the present value of economic benefits available in the
form of future refunds from or reductions in future contributions to the plan. To calculate the present value, consideration is
given to applicable minimum funding requirements.
Pension costs are calculated based on actuarial estimates and financial expectations at the beginning of the year. Service costs
are recognised in Employee costs and net interest is recognised in Financial expenses. Remeasurements (actuarial gains/losses),
comprising the differences between the expected development in pension assets and liabilities and the realised amounts at the
reporting date as well as the effect of asset ceiling are recognised in other comprehensive income.
When the benefits are changed or a plan is curtailed, the resulting change in benefits that relates to past service or the gain or
loss on curtailment is recognised in Employee costs. Gains and losses on settlement are recognised when incurred.
CONSOLIDATED FINANCIAL STATEMENTS 104
7.1 Pensions and similar obligations (continued)
Plan assets - major categories 2023 2022
Listed shares 31% 34%
Corporate bonds 25% 18%
Property 19% 19%
Government bonds 3% 2%
Cash and cash equivalents 3% 6%
Other 19% 21%
Total 100%
100%
7.1.4 Actuarial assumptions
2023 2022
CHF GBP
EUR
Other
currencies
CHF GBP EUR
Other
currencies
Discount rates 1.5% 4.5% 3.3-4.3% 5.7-26.6% 2.3% 4.8% 3.7-3.8% 1.0-10.7%
Salary increase 1.1% 0.0-3.1% 0.0-3.6% 3.0-24.3% 1.3% 0.0-2.7% 2.6-3.2% 0.0-12.0%
Pension increase 0.0% 2.6-3.0%
0.0-2.8% 0.0-1.8% 0.0% 2.7-3.2% 0.0-2.2% 0.0-2.2%
Sensitivity analysis
(DKKm)
2023
2022
+0.5% -0.5% +0.5% -0.5%
Discount rate (376) 409 (334) 363
Price inflation 64 (55) 74
(65)
Salary increase 76 (76) 93 (74)
Pension increase 241 (236) 248 (248)
+1 year -1 year +1 year -1 year
Life expectancy 147 (144) 136 (133)
Duration
Years
2023 2022
Active employees 8 6
Retired employees 12 11
Deferred vested
1)
15 7
Total employees 9 9
The sensitivities related to significant actuarial assumptions used in the calculation of the defined benefit obligation in terms of
estimated increase/(decrease) in the obligation are illustrated below.
1)
The impact from deferred vested on total estimated weighted average duration is minor due to the fact that deferred vested make up less
than 2% of the participants, and do not exist in many of the shorter duration plans.
The analysis is based on changes in assumptions, with all other variables held constant, that the Group considered to be
reasonably possible at the reporting date.
The estimated weighted average duration of the defined benefit obligation was 9 years (2022: 9 years) and is split into:
CONSOLIDATED FINANCIAL STATEMENTS 105
7.2 Hyperinflation in Türkiye
Impact on the consolidated financial statements
(DKKm)
2023
(excl. IAS
29)
Non-
monetary
items
Profit or
loss items
Retrans-
lation
(YE FX)
Total
adjust-
ments
2023
(reported)
Profit or loss
Revenue
78,704 - 1,130 (1,132)
(2)
78,702
Operating profit before other items 4,198
(58)
90
(80) (48) 4,150
Operating profit 2,942
(73)
90
(78) (61) 2,881
Net profit 285
22
- (16) 6 291
Financial ratios
Organic growth (non-IFRS) 9.7% - - - - 9.7%
Operating margin (non-IFRS) 5.3% (0.1%) 0.1% 0.0% 0.0%
5.3%
Cash flows
Cash flow from operating activities 3,325 - - (41) (41)
3,284
Cash flow from investing activities
(901) - - 9
9
(892)
Cash flow from financing activities (1,311)
- -
(17) (17) (1,328)
Free cash flow (non-IFRS) 1,835
- - (16) (16)
1,819
(DKKm)
2023
(excl. IAS 29)
Inflation
restatement,
accumulated
2023
(reported)
Financial position
Goodwill 14,389 732 15,121
Other intangible assets 1,153 295 1,448
2,945 109 3,054
Total assets 43,630 1,136 44,766
Other comprehensive income
1)
(1,127)
936 (191)
Other equity elements
7,218 99
7,317
Total equity 6,091 1,035 7,126
Deferred tax liabilities 502 101 603
Total equity and liabilities 43,630 1,136 44,766
Development in 2023
1)
In year impact of restatement amounts to DKK 467 million (2022: DKK 814 million)
Inflation restatement,
in year
In 2023, the impact of hyperinflation restatement on our three key KPIs, i.e. organic growth (non-IFRS), operating margin (non-
IFRS) and free cash flow (non-IFRS) continued to be immaterial. However, the Group’s statement of financial position was
significantly impacted, mainly by increasing the carrying amount of goodwill, customer contracts and equity.
Financial position Accumulated goodwill increased by DKK 732 million (2022: DKK 644 million) and Other intangible assets
(customer contracts) by DKK 295 million (2022: DKK 224 million), mainly due to restatement of fair values carried from the
acquisition of Rönesans in 2021 and the original acquisition of ISS Türkiye in 2005. Thus, by the end of 2023, intangible assets
included accumulated hyperinflation adjustments of DKK 1,027 million.
Right-of-use and property, plant and equipment
Likewise, total accumulated equity increased DKK 1,035 million (2022: DKK 891 million) mainly due to opening restatement of non-
monetary items of DKK 467 million (2022: DKK 814 million) and restatement effect from changes in the price index during the
year.
CONSOLIDATED FINANCIAL STATEMENTS 106
7.2 Hyperinflation in Türkiye (continued)
(DKKm)
2022
(excl. IAS
29)
Non-
monetary
items
Profit
or loss items
Retrans-
lation
(YE FX)
Total
adjustments
2022
(reported)
Profit or loss
Revenue 73,704 - 580 (426) 154
73,858
Operating profit before other items 3,840 (48) 51 (32) (29) 3,811
Operating profit 2,642 (60) 50 (30) (40) 2,602
Net profit 1,889 77 - (11) 66
1,955
Financial ratios
Organic growth (non-IFRS) 8.4% - - - - 8.4%
Operating margin 5.2% -0.1% 0.1% 0.0% 0.0% 5.2%
Cash flows
Cash flow from operating activities 3,027
- - (7)
(7) 3,020
Cash flow from investing activities
(363) -
-
7 7 (356)
Cash flow from financing activities (853) - - (2) (2) (855)
Free cash flow (non-IFRS) 1,608 - - 8 8
1,616
(DKKm)
2022
(excl. IAS 29)
Inflation
restatement,
accumulated
2022
(reported)
Financial position
Goodwill 15,209 644 15,853
Other intangible assets 1,169 224
1,393
3,151 85 3,236
Total assets 42,611 953
43,564
Other comprehensive income 12 814 826
Other equity elements 6,123 77
6,200
Total equity 6,135 891 7,026
Deferred tax liabilities 474 62 536
Total equity and liabilities 42,611 953 43,564
Profit or loss Net impact on revenue was DKK (2) million (2022: DKK 154 million) of which DKK 1,130 million (2022: DKK 580 million)
related to increase in price index of 31% during the year (2022: 21%). This was offset by the impact from retranslation to exchange
rates at 31 December of DKK 1,132 million (2022: DKK 426 million) as the TRY/DKK exchange rate decreased from 37.25 in the
beginning of 2023 to 22.82 at 31 December 2023.
Inflation restatement,
in year
Right-of-use and property, plant and equipment
CONSOLIDATED FINANCIAL STATEMENTS 107
7.2 Hyperinflation in Türkiye (continued)
Accounting policy
Inflation restatement
Price index
Retranslation from TRY to DKK
The financial statements of ISS Türkiye, including effects of inflation restatement, are translated into DKK applying the TRY/DKK
exchange rate at the reporting date as opposed to the Group’s normal practice of translating the profit or loss using the
exchange rate at the transaction date or an average exchange rate for the month. The TRY/DKK exchange rate decreased from
37.25 at the beginning of 2023 to 22.82 at 31 December 2023. The average rate was 29.80 (2022: 43.00).
The financial statements of ISS Türkiye are restated for inflation to reflect the purchasing power at the reporting date using the
consumer price index.
Restatement for hyperinflation of the financial statements of ISS Türkiye is based on the development in the consumer price index
provided by the Türkiyish Statistical Institute calculated as an average year to date conversion factor. For 2023, the inflation rate in
Türkiye was 64.77% (2022: 64%).
The restating gain or loss is recognised in financial income or expenses, except for the tax effect, which is recognised under
income tax.
Non-monetary items, which are carried at historical cost, such as goodwill, customer contracts, rightof-use assets, property, plant
and equipment and deferred tax, have been restated for the effect of inflation based on changes in the price index for the period
from initial recognition to 31 December 2023 or to the date of disposal, where relevant. The restatement was made effective from
the time, the items were initially recognised, which was no earlier than 2005, when ISS first entered Türkiye through an
acquisition.
Management assesses whether the restatement of non-monetary items represents an indication of impairment to ensure that
the restated amounts do not exceed the recoverable amounts of the assets, see 3.2, Impairment tests.
Equity includes the opening effect of restating non-monetary items. Further, the restatement effects of inflation based on
changes in the price index for the reporting period is recognised in other comprehensive income with set-off within financial
income or expenses in profit or loss.
Monetary items such as receivables, payables, loans and borrowings are not subject to restatement for the effects of inflation as
these items already reflect the purchasing power at the reporting date.
Profit or loss transactions in the period are restated to reflect changes in the price index from the time of transaction to the end
of the reporting period with the exception of depreciation and amortisation, which are recalculated based on the inflation-
adjusted carrying value of the relevant non-monetary assets.
Cash flow statement Operating profit before other items includes a non-cash effect from the inflation restatement, which has
been eliminated in the line Non-cash items related to hyperinflation.
CONSOLIDATED FINANCIAL STATEMENTS 108
7.3 Related parties
Parent and ultimate controlling party
Key management personnel
7.4 Fees to auditors
(DKKm)
2023 2022
Statutory audit 60 61
Other assurance services 1 1
Tax and VAT advisory services 6 7
Other services 8 4
Total 75 73
7.5 Subsequent events
No events have occurred subsequent to 31 December 2023, which could have a significant impact on the consolidated financial
statements.
The sole shareholder of ISS Global A/S, ISS World Services A/S, has controlling influence in the Group and is wholly owned by ISS
A/S (the ultimate parent).
The Board of Directors (Board) and the Executive Group Management (EGM) of ISS A/S are considered the Group’s key
management personnel as defined in 6.1, Management remuneration.
Apart from remuneration, including share-based incentive programmes, there were no significant transactions with members of
the Board and the EGM in 2023.
Other services comprised among other things work related to acquisitions and divestments, such as financial and tax due
diligence.
Other assurance services comprised work related to the interim financial statements and other assurance services.
Tax and VAT advisory services mainly related to tax compliance services.
CONSOLIDATED FINANCIAL STATEMENTS 109
SECTION 8
Basis of preparation
Materiality
8.1 Other material accounting policies
Basis of preparation
Fair value measurement and disclosure
Basis of consolidation
This section includes general accounting policies relevant for the preparation of the Group's consolidated financial statements.
The Group's material accounting policies are described in the relevant notes to the consolidated financial statements.
Items are measured at historical cost, except for assets and liabilities held for sale and derivatives that are measured at fair value.
Fair value measurements are categorised within the fair value hierarchy and disclosed in the relevant notes.
The consolidated financial statements comprise ISS Global A/S and entities controlled by ISS Global A/S.
Consolidation of entities is performed after elimination of intra-group balances, income and expenses. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Materiality is judged by reference to the size and nature of the item. The deciding factor is whether the omission or misstatement
could, individually or collectively, influence the economic decisions made by the primary users on the basis of the consolidated
financial statements. In particular circumstances, either the nature or the amount of an item or an aggregate of items could be
the determining factor.
The consolidated financial statements separately present items or groups of items that are considered material. In addition,
information that is considered material, either individually or in combination with other information, is disclosed.
ISS Global A/S's bonds are listed on Luxembourg Stock Exchange. The consolidated financial statements of ISS Global A/S for the
year ended 31 December 2022 comprise ISS Global A/S and its subsidiaries (collectively, the Group). Significant subsidiaries are
listed in 8.4, Group companies.
The 2023 Annual Report for ISS Global A/S was discussed and approved by the Executive Management and the Board of Directors
(the Board) on 12 March 2024 and issued for approval at the subsequent annual general meeting on 10 April 2024.
The consolidated financial statements of the Group have been prepared in accordance with IFRS © Accounting Standards as
adopted by the EU and additional requirements of the Danish Financial Statements Act (class D). In addition, the consolidated
financial statements have been prepared in compliance with the IFRS © Accounting Standards issued by the IASB.
The consolidated financial statements are presented in Danish kroner (DKK), which is ISS Global A/S’s functional currency. All
amounts have been rounded to nearest DKK million (DKKm), unless otherwise stated.
The consolidated financial statements have been prepared on the basis that the Group will continue to operate as a going
concern.
A list of the notes is presented on p. 33.
For the purpose of fair value disclosures, management has assessed that the fair values of cash and cash equivalents, trade
receivables, contingent consideration, trade payables and other current and non-current financial assets and liabilities
approximates their carrying amount largely due to the short-term nature of these items. The fair value of loans and borrowings,
including methods and assumptions used to estimate the fair value, are disclosed in 4.2, Borrowings and interests.
By virtue of agreement certain non-controlling shareholders are only eligible of receiving benefits from their non-controlling
interest when ISS as controlling shareholder has received their initial investment and compound interest on such. In such
instances the subsidiaries’ result and equity are fully allocated to ISS until the point in time where ISS has recognised amounts
exceeding their investment including compound interest on such.
CONSOLIDATED FINANCIAL STATEMENTS 110
8.1 Other material ccounting policies (continued)
Foreign currency
8.2 Change in accounting policies and disclosures
IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies
IAS 12: International Tax Reform — Pillar Two Model Rules
The Group applies the mandatory exception to recognising and disclosing information about deferred tax assets and liabilities
related to Pillar II income taxes, as provided in the 2023 amendments to IAS 12.
Transactions in currencies other than the functional currency of the respective Group companies are considered transactions
denominated in foreign currencies.
From 1 January 2023, the Group has adopted the following amendments to standards with no significant impact on recognition
and measurement:
The Group has prepared a preliminary assessment of the its exposure to Pillar II income taxes using 2023 data. Based on the
preliminary assessment, the Group anticipates to be able to apply the transitional Safe Harbour rules for all countries in 2024,
which will switch off the normal Pillar II calculation rules and thus no top-up taxes will be payable for 2024. The transitional Safe
Harbour rules are more simple than the normal Pillar II calculation rules, and can be applied during the transitional period for
2024-2026 if specific tests can be fulfilled demonstrating that the risk of Pillar II top-up taxes is low.
• Amendments to IAS 8: Definition of Accounting Estimates
The amendments impacted the Group’s disclosures of accounting policies, but not the measurement, recognition or presentation
of any items in the Group’s financial statements. From 2023, only the Group's material accounting policies are disclosed.
The Group is within the scope of the Pillar Two rules (Pillar II) applying from 1 January 2024. However, since Pillar II was not
effective at the reporting date, the Group has no related current tax exposure.
• Amendments to IAS 12: International Tax Reform — Pillar Two Model Rules
The amendments to IAS 1 and IFRS Practice Statement 2 requires us to disclose the material accounting policies instead of
significant accounting policies thereby making the accounting policies more specific and thus more relevant to users.
• Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
The amendments below impacted the disclosures of accounting policies:
• Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies
On initial recognition, except for companies operating in hyperinflationary environments, foreign currency transactions are
translated to the functional currencies of the Group companies at the exchange rates at the transaction date. Translation
differences between the exchange rates at the transaction date and the date of payment are recognised in Financial income or
Financial expenses.
Monetary items denominated in foreign currencies are translated at the exchange rates at the reporting date. The difference
between the exchange rates at the reporting date and at the transaction date or the exchange rate used in the latest financial
statements is recognised in Financial income or Financial expenses.
On recognition in the consolidated financial statements of Group companies with a functional currency other than DKK, the
statements of profit or loss and statement of cash flows are translated at the average exchange rates for the period and the
statements of financial position are translated at the exchange rates at the reporting date. Foreign exchange adjustments arising
on translation of the opening balance of equity of foreign entities and on translation of receivables considered part of the net
investment in the entity and on translation of the profit or loss statements from the exchange rates at the transaction date to the
exchange rates at the reporting date are recognised in other comprehensive income. However, if the foreign entity is a non-wholly
owned subsidiary, the relevant proportion of the translation difference is allocated to the non-controlling interest.
CONSOLIDATED FINANCIAL STATEMENTS 111
8.3 New regulations
Based on the current business setup and level of activities, none of these standards and interpretations are expected to have a
material impact on the recognition and measurement in the consolidated financial statements.
IASB issued amended standards and interpretations, which are not yet mandatory for the consolidated financial statements of the
Group at 31 December 2023. The Group expects to adopt the new standards and interpretations when they become mandatory.
CONSOLIDATED FINANCIAL STATEMENTS 112
8.4 Group companies
Northern Europe Central & Southern Europe
Denmark (ISS Global A/S's country of domicile) Austria
ISS Facility Services A/S 100%
ISS Austria Holding GmbH 100%
ISS Finance B.V.
100%
ISS Facility Services GmbH 100%
ISS Global Management A/S 100%
ISS Ground Services GmbH 100%
ISS Holding France A/S 100%
ISS Lending A/S 100%
4)
Germany
ISS Automotive Services GmbH 100%
Belgium & Luxembourg ISS Facility Services Holding GmbH 100%
ISS Catering N.V.
100% ISS Integrated Facility Services GmbH 100%
ISS Facility Services N.V.
100% ISS Energy Services GmbH 100%
ISS Reception & Support Services N.V.
100% ISS Communication Services GmbH 100%
ISS Facility Services S.A.
100% ISS Engineering Services GmbH 100%
ISS Luxinterim SARL
100%
Italy
Finland ISS Facility Services S.r.l. 100%
ISS Palvelut Holding Oy
100%
ISS Palvelut Oy 100% Portugal
Suomen Laatutakuu Palvelut Oy 100% ISS Tech Portugal, Unipessoal Lda.
100%
Netherlands Spain
ISS Building Maintenance Services B.V. 100% Integrated Service Solutions, S.L. 100%
ISS Catering Services B.V. 100% ISS Facility Services, S.A. 100%
ISS Holding Nederland B.V. 100% UTE-HOSPITALES S.A.S 65%
1)
ISS Integrated Facility Services B.V. 100%
ISS Nederland B.V. 100% Switzerland
Talentgroep Montaigne Facility Management B.V. 100%
ISS Facility Services AG 100%
ISS Schweiz AG 100%
Norway Livit FM Services AG 100%
ISS Holding AS 100%
ISS Management AS 100% Türkiye
ISS Facility Services AS 100% ISS Hazir Yemek Üretim ve Hizmet A.Ş.
50.1%
3)
ISS Serveringspartner AS 100%
ISS Proser Koruma ve Güvenlik Hizmetleri A.Ş.
50.1%
3)
ISS Service Management AS
100% ISS Tesis Yönetim Hizmetleri A.Ş.
50.1%
3)
ISS İşletme Hizmetleri A.Ş (Rönesans)
50.1%
3)
Poland
ISS Bitki Bakim ve Hasere Kontrol Hizmetleeri A.Ş. 50.1%
3)
ISS Facility Services Sp. Z o.o. 100%
ISS World Services Poland Sp. Z.o.o 100%
Sweden
ISS Facility Services Holding AB 100%
ISS Facility Services AB 100%
ISS Palvelut Holding AB 100%
UK & Ireland
ISS UK Holding Limited 100%
ISS UK Limited 100%
ISS Facility Services Ltd. 100%
ISS Mediclean Limited 100%
Pegasus Security Holdings Limited 100%
ISS Ireland Ltd. 100%
Below the Group's significant subsidiaries and joint ventures are presented per region. Together these are referred to as
"Companies within the ISS Group".
CONSOLIDATED FINANCIAL STATEMENTS 113
8.4 Group companies (continued)
Asia & Pacific Americas
Australia & New Zealand Chile
ISS Facility Management Pty Limited 100% Apunto Servicios de Alimentacion S.A. 100%
ISS Facility Services Australia Limited 100% ISS Chile S.A. 100%
ISS Facility Services Pty Ltd. 100% ISS Facility Services S.A. 100%
ISS Health Services Pty Ltd. 100% ISS Servicios de Limpieza Mecanizada S.A.
100%
ISS Holdings Pty Ltd. 100% ISS Servicios Generales Ltda. 100%
ISS Integrated Services Pty Ltd 100% ISS Servicios Integrales Ltda. 100%
ISS Property Services Pty Ltd 100%
ISS Security Pty Ltd 100% Mexico
Pacific Invest December 2004 Pty Ltd. 100% ISS Centro América, S. de R.L. de C.V. 100%
Pacific Service Solutions Pty Ltd. 100% ISS Facility Services, S.A. de C.V. 100%
ISS Facility Services Ltd. 100%
ISS Holdings NZ Ltd. 100% US & Canada
ISS Facility Services Holding, Inc 100%
China
ISS Management and Finance Co, Inc 100%
ISS Facility Services (Shanghai) Ltd. 100% ISS Facility Services, Inc (US) 100%
ISS Hongrun (Shanghai) Cleaning Services Limited 100%
Guckenheimer Enterprises Inc 100%
Shanghai B&A Property Management Co., Ltd.
100%
ISS C&S Building Maintenance Corporation 100%
Shanghai B&A Security Co., Ltd. 100%
ISS Facility Services California, Inc 100%
Shanghai ISS Catering Management Ltd. 100%
ISS Holding Inc 100%
ISS TMC Services, Inc 100%
Hong Kong
ISS Facility Services Inc. (CA) 100%
Hung Fat Cleaning Transportation Co., Ltd. 100%
ISS Adams Secuforce Ltd. 100%
Discontinued operations
ISS China Holdings Ltd. 100%
France
ISS China Holdings I Ltd. 100%
GIE ISS Services 100%
ISS EastPoint Properties Ltd. 100%
ISS Facility Services 100%
ISS EastPoint Property Management Ltd. 100%
ISS Holding Paris SAS 100%
ISS Facility Services Ltd. 100%
ISS Logistique et Production SAS 100%
ISS Greater China Ltd. 100%
ISS Mediclean (HK) Ltd. 100%
ISS Pan Asia Security Services Ltd. 100%
JSL Ltd.
100%
Silvertech E&M Engineering Co., Ltd. 100%
India
Innovative Salary Services and Payroll Advisory Pvt. Ltd.
46%
2)
ISS Facility Services India Pvt. Ltd.
100%
ISS SDB Security Services Pvt. Ltd.
46%
2)
Modern Protection India Pvt. Ltd.
46%
2)
ISS Support Services Pvt. Ltd.
100% Notes:
1)
Joint venture
Indonesia
PT ISS Facility Services 99%
PT ISS Indonesia 100%
PT ISS Jasa Fasilitas 0%
2)
Singapore
ISS Asia Pacific Pte. Ltd. 100%
ISS Catering Services Pte. Ltd. 100%
ISS Facility Services Pte. Ltd. 100%
ISS M&E Pte. Ltd.
100%
2)
By virtue of the governance structure, the Group has the power to
govern the financial and operating policies of the company.
Consequently, the company is consolidated as a subsidiary.
3)
Under certain circumstances or events, ISS may be obliged to choose
to purchase other shareholders’ shareholdings or dispose of its own
shareholdings.
4)
ISS Lending A/S applies §78a of the Danish Financial Statements Act.
Consequently, their annual report is prepared in accordance with the
requirements for Class B companies. ISS Global A/S is liable for all
ISS Lendings A/Ss current and future obligations.
CONSOLIDATED FINANCIAL STATEMENTS 114
8.5 Definitions
Alternative performance measures
Free cash flow
Organic growth, %
Operating margin, %
Total revenue growth, %
Financial ratios
Acquisitions, %
Currency adjustments
Divestments, %
Equity ratio, %
Net debt
Loans and borrowings – Securities – Cash and cash equivalents +/– Fair value of derivatives
(Revenue current year excl. hyperinflation – Comparable revenue
1)
prior year) x 100 / Comparable revenue
1)
prior year
Revenue from divestments
4)
× 100 / Revenue prior year
Total equity × 100 / Total assets
Revenue from acquisitions
2)
x 100 / Revenue prior year
Total revenue growth – Organic growth – Acquisition/divestment growth, net
3)
ISS uses various key figures, financial ratios and non-financial ratios, all of which provide our stakeholders with useful and
necessary information about the Group’s financial position, performance, cash flows and development in a consistent way. In
relation to managing the business, achieving our strategic goals and ultimately creating value for our shareholders, these
measures are considered essential.
In addition, the Group uses alternative performance measures (APMs) to provide stakeholders with additional measures to
evaluate and analyse the Group's performance. The APMs are non-IFRS financial measures defined by the Group and thus may
not be comparable with measures provided by peers or other companies' measures.
Operating profit before other items x 100 / Revenue
Cash flow from operating activities – Acq. of intangible assets and property, plant and equipment, net – Change in financial assets
(excl. equity-accounted investees) – Addition of right-of-use assets, net
(Revenue current year – Revenue prior year) x 100 / Revenue prior year
Acquisitions are treated as having been integrated with ISS at the acquisition date. Consequently, organic growth includes changes in
revenue of such acquisitions compared with expectations at the acquisition date.
CONSOLIDATED FINANCIAL STATEMENTS 115
8.5 Definitions (continued)
ESG ratios
CO
2
emmisions
Employee turnover, %
Customer retention, %
Lost Time Injury Frequency (LTIF)
Fatalities
Training and development, hours
Gender diversity, Board, %
Speak Up, number
3)
Estimated or actual revenue where available at the divestment date.
5)
AGM = Annual General Meeting.
Number of reports received through Speak Up system or alternative channels
Scope 1, 2 and 3 emissions calculated in accordance with the Greenhouse Gas Protocol. For further information see the 2023
Sustainability Report pp. 56-58.
4)
Incl. the effect from exclusion of currency effects from the calculation of organic growth and acq./div., net.
Number of employees who left in the year × 100 / Average number of employees for the year
Hours spent by participants while preparing and participating. All training sponsored by ISS, paid or unpaid as a result of
employment within ISS.
LTI is a work-related injury preventing a person from working, i.e. being unfit for at least a full working day or shift. LTIF is based
on 1 million exposure hours including contractors under ISS’s operational control
Portfolio revenue (annual value) retained at 31 December of the portfolio at 1 January / Portfolio revenue (annual value) at 1
Female board members (AGM
5)
elected) × 100 / Board members (AGM
5)
elected)
1)
Comparable revenue prior year excludes impacts from changes in exchange rates and acquisitions/divestments, net as well as impact from
hyperinflation restatement. To arrive at comparable revenue, prior year’s revenue is retranslated by applying current year’s exchange rates,
divestments and impacts from hyperinflation restatements are excluded and estimated impacts from acquisitions are added.
2)
Expectations at the acquisition date.
Measures the number of work-related fatalities
PARENT COMPANY FINANCIAL STATEMENTS 116
117
117
118
119
120
121 1
Accounting policies
121 2
Estimates and judgements
121 3
Other operating income and expenses, net
122 4
Fees to auditors
122 5
Other income and expenses, net
122 6
Financial income and expenses
123 7
Income tax
123 8
Investments in subsidiaries and joint ventures
125 9
Deferred tax
125 10
Loans and borrowings
126 11
Management remuneration
126 12
Contingent liabilities
127 13
Financial risk management
127 14
Interest rate risk
129 15
Liquidity risk
129 16
Currency risk
130 17
Related parties
131 18
New regulations
131 19
Subsidiaries and joint ventures
Primary statements
Other required disclosures
Accounting policies
Statement of profit or loss
Statement of financial position
Statement of profit or loss
Statement of comprehensive income
Statement of cash flows
Statement of financial position
Statement of changes in equity
Parent
company
financial
statements
PARENT COMPANY FINANCIAL STATEMENTS 117
Statement of profit or loss
1 January – 31 December
(DKKm) Note 2023 2022
Other operating income and expenses, net
3, 4 31
41
Operating profit before other items 31 41
Other income and expenses, net
5
(57)
(9)
Operating profit (26) 32
Income from subsidiaries and joint ventures 8 (1,320) 21
Financial income 6 800 333
Financial expenses 6 (920) (583)
Profit before tax
(1,466)
(197)
Income tax 7 3 16
Net profit
(1,463) (181)
1 January – 31 December
(DKKm)
2023 2022
Net profit (1,463) (181)
Comprehensive income
(1,463)
(181)
Statement of comprehensive income
PARENT COMPANY FINANCIAL STATEMENTS 118
Statement of cash flows
1 January – 31 December
(DKKm)
Note 2023 2022
Operating profit before other items 31
41
Changes in working capital
(10)
27
Interest received from companies within the ISS Group
716
304
Interest received, external
30
18
Interest paid to companies within the ISS Group
(474)
(151)
Interest paid, external
(220)
(223)
Income tax and joint taxation contribution received/(paid), net (15)
37
Cash flow from operating activities 58
53
Capital increase in subsidiaries and joint ventures
8 (10) (2)
Divestment and liquidation of subsidiaries and joint ventures
8 44 163
Dividends received from subsidiaries and joint ventures
8 872 937
Cash flow from investing activities 906 1,098
Other financial payments, net
10 (48) (133)
Changes in debt to companies within the ISS Group, net
10 1,162 711
Changes in receivables from companies within the ISS Group, net
(1,529) (75)
Cash flow from financing activities
(415)
503
Total cash flow 549 1,654
Cash and cash equivalents at 1 January
2,569 915
Total cash flow
549 1,654
Cash and cash equivalents at 31 December 3,118
2,569
PARENT COMPANY FINANCIAL STATEMENTS 119
Statement of financial position
At 31 December
(DKKm) Note
2023
2022
Assets
Investments in subsidiaries and joint ventures 8 22,482 22,665
Receivables from companies within the ISS Group 8,257 8,075
Other financial assets 8 90
Deferred tax assets 9 18 19
Non-current assets 30,765 30,849
Receivables from companies within the ISS Group
2,090
2,183
Other receivables
215
208
Cash and cash equivalents
3,118
2,569
Investments in subsidiaries and joint ventures held for sale 8
-
14
Current assets
5,423
4,974
Total assets 36,188
35,823
Equity and liability
Equity 7,571 9,034
Loans and borrowings 10 11,892 14,194
Non-current liabilities 11,892 14,194
Loans and borrowings 10 15,712 12,247
Provisions 8 704 -
Other liabilities 309 348
Current liabilities 16,725 12,595
Total liabilities 28,617 26,789
Total equity and liabilities 36,188 35,823
PARENT COMPANY FINANCIAL STATEMENTS 120
1 January – 31 December
(DKKm)
Share
capital
Retained
earnings
Total
2023
Equity at 1 January 180 8,854 9,034
Net profit - (1,463) (1,463)
Comprehensive income
- (1,463)
(1,463)
Changes in equity - (1,463)
(1,463)
Equity at 31 December 180 7,391 7,571
2022
Equity at 1 January
180 9,035
9,215
Net profit - (181) (181)
Comprehensive income
- (181) (181)
Changes in equity - (181) (181)
Equity at 31 December 180 8,854 9,034
Statement of changes in equity
PARENT COMPANY FINANCIAL STATEMENTS 121
1 Accounting policies
The financial statements of ISS Global A/S have been prepared in accordance with IFRS© Accounting Standards as adopted by the
EU and additional requirements of the Danish Financial Statements Act (class D). In addition, the financial statements have been
prepared in compliance with the IFRS© Accounting Standards issued by the IASB.
Changes in accounting policies are described in 8.2 to the consolidated financial statements.
Accounting policies
With the exception of the items described below, the accounting policies for ISS Global A/S are identical to the Group's accounting
policies, which are described in the notes to the consolidated financial statements.
Income from subsidiaries and joint ventures comprises dividends, impairment losses, reversal of prior years' impairment losses and
gains and losses on divestment and liquidation of subsidiaries and joint ventures. Dividends are recognised in profit or loss in the
financial year in which the dividend is declared. If dividends declared exceed the total comprehensive income for the year, an
impairment test is performed.
Investments in subsidiaries and joint ventures are measured at cost. If there is indication of impairment, an impairment test is
performed as described in the accounting policies in 3.2 to the consolidated financial statements. If the recoverable amount is
lower than the cost, investments are written down to this lower value. An impairment loss is reversed if there has been a change in
the estimates used to determine the recoverable amount, but only to the extent that the recoverable amount does not exceed the
original cost.
Tax As required by Danish legislation, ISS Global A/S is jointly taxed with all Danish resident subsidiaries. Joint taxation
contributions to/from jointly taxed companies are recognised in profit or loss in Income tax and in the statement of financial
position in Receivables from or Debt to companies within the ISS Group.
Companies which utilise tax losses in other companies pay joint taxation contribution to ISS A/S (the administration company)
equivalent to the tax base of the tax losses utilised. Companies whose tax losses are utilised by other companies receive joint
taxation contributions from ISS A/S equivalent to the tax base of the tax losses utilised (full absorption).
Derivative financial intruments The Group uses ISS Global A/S as vehicle to enter into derivate financial instruments, i.e. currency
swaps and interest rate swaps.
Interest rate swaps qualify as fair value hedges at Group level, but not in ISS Global A/S as the hedged item resides in ISS Finance
B.V. (a wholly owned subsidiary of ISS Global A/S). As a result, changes in the fair value are recognised in Financial income or
Financial expenses.
The fair value of derivatives is presented in Receivables from companies within the ISS Group when the fair value is positive and in
Other liabilities when the fair value is negative.
2 Estimates and judgements
Significant accounting estimates and judgements relating to the applied accounting policies for ISS Global A/S are the same as for
the Group to the extent of similar accounting items, see section "Estimates and judgements" in the consolidated financial
statements for a description. The specific risks for ISS Global A/S are described in the notes to the financial statements of the
parent company.
Investments in subsidiaries and joint ventures are tested for impairment when there is an indication that the investments may be
impaired. The assessment of whether there is an indication of impairment is based on both external and internal sources of
information such as performance of the subsidiaries and joint ventures, significant decline in market values etc.
3 Other operating income and expenses, net
Other operating income and expenses, net mainly comprise procurement bonuses and revaluation of receivables from companies
within the ISS Group.
Basis of preparation
Changes in accounting policies
PARENT COMPANY FINANCIAL STATEMENTS 122
4 Fees to auditors
(DKKm)
2023 2022
Statutory audit
1 1
Other assurance services 0 0
Total 1
1
5 Other income and expenses, net
6 Financial income and expenses
(DKKm)
2023 2022
Interest income on cash and cash equivalents
28
26
Fair value adjustments, interest rate swaps 51 -
Interest income from companies within the ISS Group
1)
721 307
Financial income 800 333
Interest expenses on loans and borrowings
1)
(197) (145)
Forward premiums, currency swaps (3) (12)
Fair value adjustments, interest rate swaps - (108)
Fair value adjustments, currency swaps (84) (43)
Interest expenses to companies within the ISS Group
1)
(475) (150)
Amortisation of financing fees (non-cash)
1)
(22) (22)
Commitment fees (16) (43)
Bank fees (3) (2)
Foreign exchange losses (120) (58)
Financial expenses (920) (583)
1)
Measurement basis amortised cost.
Other assurance services comprised work related to interim financial statements and other assurance services.
Fair value adjustments, interest rate swaps related to instruments used for fair value hedging at Group level, but being ineffective
hedges in ISS Global A/S.
Interest expenses on loans and borrowings comprised mainly interest on issued bonds. The increase compared to 2022 was
driven by increased interest rates throughout 2023 of which DKK 43 million related to the interest rate swap.
Other expenses comprised a fair value adjustment of a contingent consideration associated with the transaction in Türkiye in
Fair value adjustments, currency swaps related to instruments used for net investment hedging at Group level, but being
ineffective hedges in ISS Global A/S.
Foreign exchange losses mainly related to exchange rate movements on intercompany loans to foreign subsidiaries as well as on
external loans and borrowings denominated in currencies other than DKK.
PARENT COMPANY FINANCIAL STATEMENTS 123
7 Income tax
(DKKm)
2023 2022
Current tax
(20) (2)
Deferred tax
1 (5)
Other taxes
5 2
Prior year adjustments, net
11 (11)
Income tax
(3) (16)
In %
2023 2022
Statutory income tax rate in Denmark 22.0 % 22.0 %
Income from subsidiaries and joint ventures 13.1 % 104.0 %
Non-tax deductible expenses less non-taxable income (33.7)% (122.5)%
Other taxes (0.4)% (1.0)%
Prior year adjustments, net
(0.8)% 5.6 %
Effective tax rate
0.2 % 8.1 %
8 Investments in subsidiaries and joint ventures
(DKKm)
Continuing
operations
Assets held
for sale
Continuing
operations
Assets held
for sale
Cost at 1 January 32,304 14 31,402 207
Additions
1)
1,341 - 902 -
Disposals - (14) - (193)
Cost at 31 December 33,645 - 32,304
14
Revaluation at 1 January
(9,639) - (8,726) (57)
Impairment losses
(1,959) - (1,174) -
Reversal of prior years' impairment losses
435 - 261 -
Disposals
- - - 57
Revaluation at 31 December (11,163) - (9,639) -
Carrying amount at 31 December 22,482 - 22,665 14
1)
In 2023, DKK 1,331 million related to non-cash transactions (2022: DKK 900 million).
Effective tax rate
Additions In 2023, ISS Global A/S made a capital increase in ISS Holding France A/S of DKK 1,331 million, in Japan of DKK 7 million
and in Signal Arkitekter ApS of DKK 3 million.
2023
2022
PARENT COMPANY FINANCIAL STATEMENTS 124
8 Investments in subsidiaries and joint ventures (continued)
(DKKm)
Impairment
losses 2023
Recoverable
amount
Applied
discount rate,
net of tax
Investments in subsidiaries and joint ventures (continuing operations)
France
1)
1,331 (665)
-
Germany 625 1,829
9.0%
Signal 3 1
-
Impairment losses 1,959
Income from subsidiaries and joint ventures
(DKKm)
2023
2022
Received dividends 872 937
Proceeds from divestment and liquidation of subsidiaries and joint ventures 50 133
Carrying amount of disposed subsidiaries and joint ventures (14) (136)
Impairment losses (1,959) (1,174)
Reversal of prior years' impairment losses 435 261
Recapitalisation of equity in ISS Holding France A/S (704) -
Income from subsidiaries and joint ventures (1,320) 21
Subsidiaries and joint ventures
For a list of significant directly owned subsidiaries and joint ventures, see note 19, Subsidiaries and joint ventures.
Disposals In 2023, ISS Global A/S sold their subsidiary (assets held for sale) in Brunei after which no directly owned subidiaries are
classified as assets held sale.
On 9 August 2023, ISS announced the intention to divest the French business, excluding key account customers. As a result, ISS
France was classified as held for sale in ISS Holding France A/S. On 22 December 2023, ISS signed a binding agreement to divest
the business to Onet SA, a French facility services company, with expected closing in the first half of 2024. The classification as held
for sale and subsequent fair value adjustments resulted in losses in ISS Holding France A/S of DKK 1,923 million and consequently
the recoverable amount (equity) amounted to DKK 665 million (negative) at 31 December 2023. During 2023, ISS Global A/S made
a capital increase of DKK 1,331 million, which is considered fully impaired and has been recognised as an impairment loss. In
addition, a provision of DKK 704 million has been recognised to cover recapitalisation of the negative equity in ISS Holding France
A/S at 31 December 2023 and certain transaction costs.
Reversal of prior years' impairment losses In 2023, losses of DKK 306 million on the investment in the Netherlands were reversed.
The Dutch operation continued to deliver in line with the business case and it has been assessed that the increase in the
recoverable amount is sustainable. Furthermore, losses of DKK 129 million in ISS Lending A/S were reversed as equity continued to
increase in 2023. In 2022, losses of DKK 232 million in the Netherlands and DKK 29 million in ISS Lending A/S were reversed.
1)
The French activities are owned through a holding company, ISS Holding France A/S. The recoverable amount is based on the equity at
31 December 2023 in this holding company.
Impairment losses The recoverable amount of investments in subsidiaries and joint ventures is determined on the basis of the
value-in-use adjusted for net debt. Value-in-use applied in the impairment test is equal to value-in-use established for the Group,
see 3.2 to the consolidated financial statements. Subsidiaries classified as held for sale are measured at the lower of their carrying
amount and fair value less costs to sell. Impairment losses recognised in 2023, see below.
In Germany, the impairment loss was driven by a decrease in the recoverable amount mainly due to a decrease in the net cash
position following the payment of restructuring costs related to the Deutsche Telekom contract and funds being tied up in working
capital.
PARENT COMPANY FINANCIAL STATEMENTS 125
9 Deferred tax
Development in deferred tax
(DKKm)
2023 2022
Deferred tax assets/(liabilities) at 1 January 19 12
Prior year adjustments, net 0 2
Tax on profit before tax (1) 5
Deferred tax assets at 31 December 18 19
10 Loans and borrowings
2023 2022
Issued bonds 10,413 10,379
Bank loans 15 (9)
Debt to companies within the ISS Group 17,176 16,071
Total 27,604 26,441
Non-current liabilities 11,892 14,194
Current liabilities 15,712 12,247
Loans and borrowings 27,604 26,441
Cash and cash equivalents (3,118) (2,569)
Receivables from companies within the ISS Group (10,347) (10,258)
Derivatives, net 45 58
Net debt 14,184
13,672
Furthermore, EUR 300 million of EMTN bonds will mature in December 2024. In the first half of 2024, ISS Global A/S will evaluate
different refinancing options.
At 31 December 2023, the fair value of bonds was DKK 9,879 million (2022: DKK 9,319 million). The fair value of bonds was based
on the quoted market price on the Luxembourg Stock Exchange and measurement is categorised as Level 1 in the fair value
hierarchy. For the remaining loans and borrowings, the fair values are not materially different from their carrying amounts due to
their short-term nature.
Refinancing
Financing fees
Fair value
ISS Global A/S has no recognised or unrecognised deferred tax assets regarding tax losses carried forward.
(DKKm)
At 31 December 2023, accumulated financing fees recognised in loans and borrowings amounted to DKK 44 million (2022: DKK 41
million). The increase compared to last year was due to ordinary amortisation of DKK 22 million (2022: DKK 22 million) recognised
in financial expenses, offset by financing fees of DKK 25 million being capitalised in relation to the new Revolving Credit Facility.
On 26 June 2023, ISS Global A/S entered into a new senior unsecured Revolving Credit Facility of EUR 900 million with a syndicate
of 12 banks. The facility matures in June 2028 with a two-year extension option and replaces the EUR 1 billion Revolving Credit
Facility maturing in 2024. The new Revolving Credit Facility is not subject to financial covenants and the margin is determined semi-
annually based on a margin grid.
PARENT COMPANY FINANCIAL STATEMENTS 126
10 Loans and borrowings
(continued)
Cash flow impact from changes in loans and borrowings
(DKKm)
Issued
bonds
Bank loans
and other
Total
2023
At 1 January 10,379
16,071 (9) 26,441
Foreign exchange adjustments 23 (57) - (34)
Cash flows - 1,162
(48)
1,114
Other 11 - 72 83
At 31 December 10,413 17,176 15 27,604
2022
At 1 January 10,369 15,389 (14) 25,744
Foreign exchange adjustments -
(29) - (29)
Cash flows - 711 (133) 578
Fair value adjustments
- -
43
43
Other 10 - 95 105
At 31 December 10,379 16,071 (9) 26,441
11 Management remuneration
12 Contingent liabilities
Senior facility agreement
EMTNs (EUR 500 million) maturing in 2025
Guarantee related to the revolving credit facility
Debt to
companies
within the
ISS Group
Key management personnel of the Group as defined in 6.1 to the consolidated financial statements are also considered key
management personnel of the parent.
Remuneration to key management personnel is specified in 6.1 to the consolidated financial statements.
ISS Global A/S guarantees the borrowings under the unsecured senior facility agreement.
ISS Global A/S guarantees the EMTN bonds for a principal amount of EUR 500 million maturing in 2025 issued by ISS Finance B.V.,
a 100% owned subsidiary.
ISS Global A/S has issued a guarantee related to ISS companies’ possible draw on the revolving credit facility of EUR 900 million.
The facility was unused at 31 December 2023.
Parent company guarantees
ISS Global A/S has issued parent guarantees and performance bonds for various subsidiaries' current and future financial liabilities
and obligations under customer contracts and pension liabilities amounting to DKK 8.1 billion (2022: DKK 6.0 billion). Furthermore,
ISS Global A/S has issued parent guarantees for various subsidiaries' current and future financial liabilities towards the Group's
main car fleet provider. The increase compared to 2022 related mainly to a new customer contract in the UK.
PARENT COMPANY FINANCIAL STATEMENTS 127
12 Contingent liabilities
(continued)
ISS Global A/S and certain Danish Group companies are jointly registered for VAT and are jointly liable for the payment hereof.
13 Financial risk management
Credit risk
14 Interest rate risk
Withholding taxes
ISS Global A/S is jointly taxed with all Danish resident subsidiaries. ISS Global A/S and the companies within the joint taxation have
a joint and unlimited liability of Danish corporate and withholding taxes related to dividends, interests and royalties. As per 31
December 2023 Danish corporate and withholding taxes within the joint taxation amounted to DKK 0 million (2022: DKK 0 million).
Any subsequent adjustments to Danish withholding taxes may change this joint and unlimited liability.
ISS Global A/S's exposure towards interest rates is illustrated below, where a breakdown of ISS Global A/S's loans and borrowings
in floating and fixed rates is provided. The interest rate exposure to floating interest rates is primarily in EUR.
ISS Global A/S's financial risks are managed centrally by Group Treasury based on the treasury policy approved by the Board of
Directors of ISS A/S. The objectives and policies for measuring and managing exposure to financial risks is described in 4.3 to the
consolidated financial statements. The risks specific to ISS Global A/S related to interest rate risk, liquidity risk and currency risks
are described below in note 14, 15 and 16, respectively.
At 31 December 2023, the exposure to credit risk related to cash and cash equivalents, loans to companies within the ISS Group
and other financial items was DKK 13,489 million (2022: DKK 12,877 million), see note 10, Loans and borrowings. Exposure to
credit risk on loans to companies within the ISS Group is managed at Group level. As these loans are controlled by the Group and
part of the Group’s capital management, expected credit losses are considered to be insignificant.
VAT
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial
instruments. Exposure relates to bank loans, bonds or interest rate swaps with floating interest rates.
PARENT COMPANY FINANCIAL STATEMENTS 128
14 Interest rate risk
(continued)
2023
2022
Maturity
Nominal
interest rate
Nominal
value
Carrying
amount
Carrying
amount
Issued bonds (fixed interest rate)
EMTNs (EUR 300 million) 2024 2.13% 2,237 2,237 2,229
EMTNs (EUR 500 million) 2026 0.88% 3,727 3,713 3,700
EMTNs (EUR 600 million) 2027 1.50% 4,471 4,463 4,450
10,435 10,413 10,379
Bank loans (floating interest rate)
Bank loans
37
15
(9)
37 15 (9)
Intra-group (floating interest rate)
17,176 17,176 16,071
17,176 17,176 16,071
Nominal amount
Carrying
amount
Change
in FV
Maturity
Interest rate swap EUR 300 million (57)
51
2025
The estimate was based on the Group’s floating rate loans and borrowings and receivable from companies within the ISS Group,
i.e. disregarding cash and cash equivalents, as the level at 31 December is typically the highest in the year and thus not
representative for the purpose of this analysis.
Interest rate sensitivity
An increase in relevant interest rates of 1%-point, with all other variables held constant, would have decreased net profit by DKK 90
million (2022: decreased by DKK 79 million).
(DKKm)
Debt to companies within the ISS Group
The interest rate risk is measured by the duration of the gross debt (fixed-rate period). As at 31 December 2023, the duration of
gross debt was approximately 1.0 years (2022: 1.3 years).
(DKKm)
At 31 December2023, ISS Global A/S had an interest rate swap agreement with a nominal amount of EUR 300 million whereby ISS
Global A/S receives a fixed rate interest and pays a variable interest rate on the nominal amount. On Group level, the interest rate
swap qualifies as a fair value hedge, and hedge accounting is applied. However, as the fixed rate bond resides in ISS Finance B.V.,
the hedge is not effective in ISS Global A/S and the fair value adjustments are recognised in profit or loss.
Fair value hedge
PARENT COMPANY FINANCIAL STATEMENTS 129
15 Liquidity risk
Liquidity reserves
Contractual maturities of financial liabilities
(DKKm)
Carrying
amount
Contractual
cash flows
< 1
year
1-2
years
2-3
years
3-4
years
4-5
years
> 5
years
2023
Bonds and bank loans 10,428
10,842 2,417 100 3,809 4,516 - -
Debt to companies within the ISS Group 17,176 17,825 14,085 3,740 - - - -
Other financial liabilities 135 135 135 - - -
- -
Derivatives 70 70 70
- - - - -
Total financial liabilities
27,809
28,872
16,707 3,840 3,809
4,516
- -
2022
Bonds and bank loans 10,370
10,926
147 2,374 99 3,800
4,506 -
Debt to companies within the ISS Group 16,071
16,241 12,464 46 3,731
- - -
Other financial liabilities 141 141 141 - -
- - -
Derivatives 108 108 108 - - - - -
Total financial liabilities 26,690 27,416 12,860
2,420 3,830 3,800 4,506
-
16 Currency risk
Currency risk arises from changes in exchange rates, and affects ISS Global A/S’s result, investments or value of financial
instruments.
To a limited extent ISS Global A/S is exposed to currency risk on loans and borrowings (external) that are denominated in
currencies other than DKK as well as intercompany loans to foreign subsidiaries as these are typically denominated in the
functional currency of the subsidiary.
At 31 December 2023, 83.8% (2022: 84.3%) of ISS Global A/S's loans and borrowings were denominated in EUR or DKK.
The contractual maturities of financial liabilities below are based on the undiscounted contractual cash flows, i.e. including interest
payments estimated based on market expectations at 31 December. The risk implied from the values reflects the one-sided
scenario of cash outflows only.
Liquidity risk results from ISS Global A/S's potential inability or difficulty in meeting the contractual obligations associated with its
financial liabilities due to insufficient liquidity.
ISS Global A/S's liquidity reserves mainly consist of funds (cash and cash equivalents less not readily available or restricted cash)
and unused credit facilities. The level of cash and cash equivalents is typically highest at 31 December and not a representative
level for the rest of the year. At 31 December 2023, ISS Global A/S's liquidity reserves consisted of readily available liquid funds of
DKK 3,118 million (2022: DKK 2,569 million) and an unused revolving credit facilities of DKK 6,708 million (2022: DKK 7,276 million)
maturing in June 2028 with a two years extension option.
PARENT COMPANY FINANCIAL STATEMENTS 130
16 Currency risk (continued)
(DKKm)
Exposure,
net
Profit or loss
2023
EUR/DKK (12,583) 8,104 (4,479) 1% (45)
TRY/DKK
1)
16 244 260
30% 78
USD/DKK 972 (1,089) (117) 10% (12)
Other/DKK (1,197) 1,416 219 10% 22
Total
(12,792) 8,675 (4,117)
2022
EUR/DKK (12,469) 7,333 (5,136) 1% (51)
GBP/DKK (391) (857) (1,248) 10% (125)
USD/DKK 1,349 (2,226) (877) 10% (88)
CHF/DKK (451) (302) (753) 10% (75)
Other/DKK (651) 1,029 378 10% 38
Total (12,613) 4,977 (7,636)
17 Related parties
Loans and borrowings – foreign currency sensitivity
Increase
in FX
Currency
swaps
(contractual)
Currency
exposure
(nominal)
A change in relevant currencies, with all other variables held constant, would have impacted profit or loss with the amounts
below. The analysis is based on the Group’s internal monitoring of currency exposure on loans and borrowings, intercompany
loans, external long-term receivables, as well as cash and cash equivalents.
Sensitivity
1)
TRY is not hedged due to high costs of hedging. Currency swaps comprise internal derivatives.
• received dividends in total of DKK 872 million (2022: DKK 937 million) from companies within the ISS Group, see note 8,
Investments in subsidiaries and joint ventures.
• made a capital increase in ISS Holding France A/S of DKK 1,331 million, in Japan of DKK 7 million and in Signal Arkitekter ApS
of DKK 3 million (2022: DKK 902 million in two subsidiaries), see 8, Investments in subsidiaries and joint ventures.
In addition to the description in note 7.3 to the consolidated financial statements of related parties and transactions with these,
related parties of ISS Global A/S comprise ISS World Services A/S and its subsidiaries, associates and joint ventures, see 8.4 to the
consolidated financial statements.
• received/paid interest from/to companies within the ISS Group, see 6, Financial income and expenses.
• paid joint taxation contribution equal to 22% of taxable income to jointly taxed Danish resident subsidiaries.
In 2023, ISS Global A/S had the following transactions with other related parties, which were all made on market terms:
• debt to companies within the ISS Group is disclosed in 10, Loans and borrowings.
• short-term receivable from subsidiaries was DKK 2,090 million (2022: DKK 2,183 million).
In 2022, currency swaps included certain swaps designated as net investment hedges at Group level related to investments in
subsidiaries in the UK (GBP), the US (USD) and Switzerland (CHF). In 2023, the Group decided to cease net investment hedging of
investments in subsidiaries, and consequently no currency swaps are designated as such.
PARENT COMPANY FINANCIAL STATEMENTS 131
18 New regulations
19 Subsidiaries and joint ventures
Directly owned subsidiaries and joint ventures
ISS Facility Services Australia Ltd. Australia 100%
Pacific Invest December 2004 Pty Ltd. Australia 100%
ISS Austria Holding GmbH Austria 100%
ISS N.V. Belgium 100%
ISS Chile S.A. Chile
100%
ISS Greater China Ltd. China 100%
ISS International Czech Republic s.r.o. Czech Republic 100%
ISS Facility Services A/S Denmark 100%
ISS Global Management A/S Denmark 100%
ISS Holding France A/S Denmark 100%
ISS Lending A/S Denmark 100%
Signal Arkitekter ApS Denmark
100%
ISS Palvelut Holding Oy Finland 100%
ISS Facility Services GmbH Germany 100%
ISS International Hungary Kft. Hungary 100%
ISS Facility Services India Pvt. Ltd. India 100%
PT ISS Indonesia Indonesia 100%
PT ISS Catering Services Indonesia 49%
ISS Ireland Holding Limited. Ireland
100%
ISS Facility Services S.r.l. Italy 100%
Nihon ISS KK Japan 100%
ISS Lietuva UAB Lithuania 100%
ISS Centro América, S de RL de CV Mexico 100%
ISS Holding Nederland B.V. Netherlands 100%
ISS Finance B.V. Netherlands 100%
ISS Holdings NZ Ltd. New Zealand 100%
ISS Holding AS Norway
100%
ISS Facility Services Sp. Z.o.o. Poland 100%
ISS Tech Portugal Portugal 100%
ISS Romania Group SRL Romania 100%
ISS Asia Pacific Pte. Ltd. Singapore 100%
ISS Facility Services Pte. Ltd. Singapore 100%
ISS Facility Services (Pty) Limited South Africa 100%
Integrated Service Solutions S.L. Spain 100%
ISS Facility Services Holding AB
Sweden 100%
ISS Holding AG Switzerland 100%
ISS Tesis Yönetim Hizmetleri A.Ş. Turkey 50%
ISS UK Holding Limited. United Kingdom 100%
New standards and interpretations not yet implemented are described in 8.3 to the consolidated financial statements.
MANAGEMENT STATEMENTS 132
Management statement
Executive Management
Board of Directors
INDEPENDENT AUDITOR’S REPORT 133
Independent auditor’s report
INDEPENDENT AUDITOR’S REPORT 134
INDEPENDENT AUDITOR’S REPORT 135
INDEPENDENT AUDITOR’S REPORT 136
CVR no. 30 70 02 28
FORWARD LOOKING STATEMENTS 137
Forward looking statement
This Annual Report contains forward-looking state-
ments, including, but not limited to, the guidance
and expectations provided in Outlook on p. 4.
Statements herein, other than statements of his-
torical fact, regarding future events or prospects,
are forward-looking statements.
The words may, will, should, expect, anticipate, be-
lieve, estimate, plan, predict, intend or variations of
such words, and other statements on matters that
are not historical fact or regarding future events or
prospects, are forward-looking statements. ISS has
based these statements on its current views with
respect to future events and financial perfor-
mance. These views involve risks and uncertainties
that may cause actual results to differ materially
from those predicted in the forward-looking state-
ments and from the past performance of ISS.
Although ISS believes that the estimates and pro-
jections reflected in the forward-looking state-
ments are reasonable, they may prove materially
incorrect. Actual results may differ materially. For
example as a result of risks related to the facility
service industry in general or to ISS in particular,
including those described in this report and other
information made available by ISS. As a result, you
should not rely on these forward-looking state-
ments.
ISS undertakes no obligation to update or revise
any forward-looking statements, whether as a re-
sult of new information, future events or other-
wise, except to the extent required by law.